Posted by JYD on Saturday, September 6, 2008 at 5:14pm.
Wal-Mart, a discount store chain, is planning to build a new store in
Rock Springs, Maryland. The parcel of land the company owns is large
enough to accommodate a store with 140,000 square feet of floor space.
Based on marketing and demographic surveys of the area and historical
data from its other stores, Wal-Mart estimates its annual profit
contribution per square foot for each of the store's departments to be
as shown in the following table.
Department Profit contribution per ft2
Men's clothing $4.25
Women's clothing $5.10
Children's clothing $4.50
Toys $5.20
Housewares $4.10
Electronics $4.90
Auto supplies $3.80
Each department must have at least 15,000 ft2 of floor space and no
department can have more than 20% of the total retail floor space. Men's
women's and children's clothing plus housewares keep all their stock on
the retail floor; however, toys, electronics, and auto supplies keep
some items (bicycles, televisions, tires, etc.) in inventory. Thus, 10%
of the total retail floor space devoted to these three departments must
be set aside outside the retail area for stocking inventory.
Formulate a linear programming model that can be used to determine
the floor space that should be devoted to each department in order to
maximize profit contribution.
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