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Assignment 3

Downton Entertainment is considering opening new restaurant locations in Illinois and has identified 10 potential sites. The document provides the estimated net present value for building either a Blue Crab or Venice restaurant at each site, and indicates which sites are within 15 miles of each other. The objective is to determine the optimal restaurant type to build at each site while avoiding having two of the same chain within 15 miles of each other to maximize total net present value.

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239 views3 pages

Assignment 3

Downton Entertainment is considering opening new restaurant locations in Illinois and has identified 10 potential sites. The document provides the estimated net present value for building either a Blue Crab or Venice restaurant at each site, and indicates which sites are within 15 miles of each other. The objective is to determine the optimal restaurant type to build at each site while avoiding having two of the same chain within 15 miles of each other to maximize total net present value.

Uploaded by

megan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Assignment 3: Finding Locations for New Downton Entertainment's Restaurants

Downton Entertainment owns and operates several different restaurant chains including Blue Crab
and Venice. The company is considering opening a number fo new units in Illinois. There are ten sites
available for the company to build new restaurants and the company can build either type of
restaurant at a given site. The following table summarizes the estimated net present value (NPV) of
the cash flows resulting from locating each type of restaurant at each of the sites and also indicate
which sites are within 15 miles of each other.

Blue Crab Venice Other Sites


Site NPV NPV within 15 miles
1 $ 11.8 $ 16.2 2, 3, 4
2 $ 13.3 $ 13.8 1, 3, 5
3 $ 19.0 $ 14.6 1, 2, 4, 5
4 $ 17.8 $ 12.4 1, 3
5 $ 10.0 $ 13.7 2, 3, 9
6 $ 16.1 $ 19.0 7
7 $ 13.3 $ 10.8 6, 8
8 $ 18.8 $ 15.2 7
9 $ 17.2 $ 15.9 5, 10
10 $ 14.4 $ 16.8 9

Suppose the company does not want to build two units from the same chain within 15 miles of each
other (for example, it does not want to build two Blue Crabs within 15 miles of each other nor is it
willing to build two Venices within 15 miles of each other). Determine which (if any) restaurant the
company should build at each site in order to maximize the total NPV.
Bojectives

decsion Blue Venice blue choen site 1 2 3 4


$ 11.8 $ 16.2 0 1 1 1 1 1 1
$ 13.3 $ 13.8 0 0 2 1 1 1
$ 19.0 $ 14.6 0 0 3 1 1 1 1
$ 17.8 $ 12.4 0 0 4 1 1 1
$ 10.0 $ 13.7 0 0 5 1 1
$ 16.1 $ 19.0 0 1 6
$ 13.3 $ 10.8 0 0 7
$ 18.8 $ 15.2 0 0 8
$ 17.2 $ 15.9 0 0 9
$ 14.4 $ 16.8 0 1 10

1. no blue

<= <= <= <=

2. blue cash can be with 15 miles


<= <= <= <=

2
5 6 7 8 9 10

1
1

1 1
1 1
1 1 1
1 1 1 1
1 1 1

<= <= <= <= <= <=

<= <= <= <= <= <=

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