For the Rosenberg Land Development problem (Problem 2 in Chapter 14), suppose that the construction costs are uncertain.
Specifically, assume that the distribution ofconstruction costs is normally distributed, with the mean values as given, and standarddeviations equal to 15% of the mean.
Using the optimal solution to the linear optimization model, find the probability of exceeding the budget after construction is started Rosenberg Land Development (RID) is a developer of condominium properties in the Southwest United States.
RLD has recently acquired a 40.625-acre site outside Phoenix. Arizona.
Zoning restrictions allow at most 8 units per acre. Three type of condominiums are planned one-, two-, and three-bedroom units The average construction costs for each type of unit are $450,000, $600,000, and $750,000, respectively. These units will generate a net profit of 10%. The company has equity and loans totaling $180 million dollars for this project.
From prior development projects, senior managers have determined that there must be a minimum of 15% one-bedroom units, 25% two-bedroom units, and 25% three-bedroom units.
Develop a linear optimization model to determine how many of each type of unit the developer should build.
Implement your model on a spreadsheet and find an optimal solution.
Explain the value of increasing the budget for the project.