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1. EZ Storage would like to expand its successful business into a neighboring town. In doing so, the company must determine how many storage
1. EZ Storage would like to expand its successful business into a neighboring town. In doing so, the company must determine how many storage rooms of each size to build. The problem has been formulated as a linear program (LP), as follows: maximize Z=60x1 + 50x2 subject to: 2x + 4x2 100x1 + 60x2 X1 x1 & X2 VI VI VI AI (monthly earnings) 400 (advertising budget) 8000 (square footage required) 60 (expected rental limit) M 0 where x is the number of large spaces developed, and x2 is the number of small spaces developed. Solve this linear optimization problem using the Graphical Method (i.e., not using Excel steps). Specifically, you should do the following: a. Graph the constraint boundaries. [8 pts] b. Identify the feasible region for this problem on the graph. [2 pts] you need to show the C. Identify the optimal corner point. (Hint: There is more than one way to accomplish this.) [2 pts] d. Determine the optimal solution for this problem, i.e., what are the optimal x and x2 values and the corresponding profit level? (Hint: Don't "eyeball" it- -use algebra.) [8 pts] e. Briefly explain how you would determine the shadow price of the advertising budget constraint. (Alternatively, calculate the shadow price and show the steps taken.) [4 pts] f. If the rental limit constraint is decreased from 60 to 50, by how much will the monthly earnings change? [4 pts] g. To use linear programming, several assumptions/requirements must be met. Identify at least one LP assumption/requirement which is violated in this context, i.e., which may not be appropriate when the decision variables relate to the number of storage units developed. [2 pts] I
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