Rosenberg Land Development (RLD) 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 types 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%. From prior development projects, senior managers have determined that there must be a minimum of 15% one-bedroom units, 25% twobedroom units, and 25% three-bedroom units.
a) Develop a linear optimization model to determine how many of each type of unit the developer should build.
b) Implement your model on a spreadsheet and find an optimal solution.
c) The company has equity and loans totaling $180 million dollars for this project. How this constraint would change the optimal solution? Explain the value of increasing the budget for the project.