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INSTEAD OF within 1 5 miles of eachother change to within 1 5 miles of the current site 27. Darten Restaurants owns and operates several
INSTEAD OF "within miles of eachother" change to "within miles of the current site"
27. Darten Restaurants owns and operates several different restaurant chains, including Red Snapper and the Olive Grove. The company is considering opening a number Of new units in Ohio. There are 10 different 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 NPV of the cash flows (in millions) resulting from locating each type of restaurant at each of the sites and also indicates which sites are within 15 miles of each other. Site 1 2 3 4 5 6 7 8 9 10 Red Snapper NPV $11.8 13.3 19.0 17.8 10.0 16.1 13.3 18.8 17.2 14.4 Olive Grove NPV $16.2 13.8 14.6 12.4 13.7 19.0 10.8 15.2 15.9 16.8 Other Sites within 15 Miles 7 7 5, 10 9 a. 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 Red Snappers within 15 miles of each other nor is it willing to build two Olive Groves within 15 miles of each other). Create a spreadsheet model to determine which (if any) restaurant it should build at each site in order to maximize total NPV. b. What is the optimal solution? c. Now additionally suppose the company does not want to build a Red Snapper unless it also builds an Olive Grove at another site within 15 miles. Modify your spreadsheet model to determine which (if any) restaurant it should build at each site in order to maximize total NPV. the 0Dtimal solution? d.
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