Question

You own a car dealership and are trying to decide how to configure the showroom floor. The floor has 2000 square feet of usable space. You have hired an analyst and asked her to estimate the NPV of putting a particular model on the floor and how much space each model requires: Model MB345 MC237 MY456 MG231 MT347 MF302 MG201 NPV $4,000 $4,900 $3,000 $4,000 $6,000 $2,000 $2,500 Space Requirement (sq. ft.) 200 250 240 150 450 200 150 In addition, the showroom also requires office space. The analyst has estimated that office space generates a NPV of $14 per square foot. What models should be displayed on the floor and how many square feet should be devoted to office Complete the Pl table below: (Round to two decimal places.) Model MB345 MC237 MY456 NPV $4,000 $4,900 $3,000 $4,000 $6,000 $2,000 $2,500 Space Requirement(sq. ft.) 200 250 240 150 450 200 150 MG231 MT347 MF302 MG201

Answer 1

Given,

Total Usable Space = 2000 Square Feet

Estimated NPV by office space = $ 14 Per Square Foot

Solution :-

Using the in terms A TB profitability NPV per index (PI) sq.ft. of D = B ² model NPV Spale Requirement (sq. ft.) 200 PI (NPV per Square foot $20 IMBUS $4000 mc 237 $4900 250 $19.6 My u56 $3000 240 $12.5 MG231 $ 4000 Iso $26.67 MT3US $6000 uso $ 13:33 MF 302 $2000 200 $10 IMG 201 $2500 $16.67 The office $ 14 analysto has estimated that space generates a NPU of per square foot.

Thus, those models, which has NPU per square foot greater than NPV per square foot of $14, should be displayed on the floor. So, these models are: MB 3us, MC 237, MG231, ma 201. Total space occupied by those models is 750 sq. ft. (200 +250 +150 +1so). And, Space devated to office - Total usable – Space occupied by Space models to be displayed - 2000 square feet - 750 square feet - 1250 square feet Thus, 1250 square feet should be devoted to office.