A local asset management company oversees the repair and replacement of the highway infrastructure system.
The annual budget allocations are 50,000,000 for urban assets. 20,000,000 for suburban assets, and 10,000,000 for rural assets. In complying with GASB 34 requirements, assets can be repaired red or replaced.
The repair related costs are $100,000. $85,000, and $80,000 per linear mile of urban, suburban, and rural roads, respectively.
The replacement costs are $800,000. $700,000. and $600,000 per linear mile urban, suburban, and rural roads, respectively. You are required to replace at least 3 linear mile of roads and repair at least 10 linear miles of roads.
Each linear mile of new road is credited 10 years of service life, and each linear mile of repaired road is credited with 2.5 years of service life.
Your task is to formulate the above problem as a Linear Program (LP) and use Excels solver or graphical method to determine the optimum solution.