[answered] A department store chain is planning to open a new store. I

I need help solving the attached problem in Excel, and it can only be done in Excel. Thanks!

A department store chain is planning to open a new store. It needs to decide how to allocate the

125,000 square feet if available floor space among seven departments. Data on expected

performance of each department per month, in terms if square feet (sf), are shown in the table.

The company has gathered \$25 million to invest in floor stock. The risk column is a measure of risk

associated with investment in floor stock based on past data from other stores and accounts for

outdated inventory, pilferage, breakage, etc. For instance, electronics loses 24% of its total

investment; furniture loses 12% of its total investment, etc. The maximum total risk can be no

greated than 12% of the actual investment.

a. Develop a linear optimization model to maximize profit.

b. If the chain obtains another \$2.5 million of investment capital for stock, what would the new

solution be? allocate the

ted

n the table. easure of risk

counts for

total

an be no ld the new Department

Electronics

Furniture

Clothing-Men

Clothing - Women

Jewelry

Books

Appliances Investment/Sf Risk as a % of \$ invested

Minimum SF Maximum SF

\$

100.00

24%

6000

30000

\$

50.00

12%

10000

30000

\$

30.00

50%

2000

5000

\$

600.00

10%

3000

40000

\$

900.00

14%

1000

10000

\$

50.00

2%

1000

50000

\$

400.00

3%

12000

40000 Expected Profit per Sf

\$

12.00

\$

6.00

\$

2.00

\$

30.00

\$

20.00

\$

1.00

\$

13.00

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