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please provide the decision variables,objective function, constriant equations and how it will be solved in excel? solver? Case: Motel Location for Natures Inn Natures Inn
please provide the decision variables,objective function, constriant equations and how it will be solved in excel? solver?
Case: Motel Location for Natures Inn
Natures Inn operates a motel chain with two types of motels. Under its brand Comfort Express
(CE), it offers a relatively inexpensive, spartan motel. Under its Family Suites (FS) brand, it
offers a more expensive motel distinguished by various extra features. Both brands are
associated with the latest ideas in green building design, attracting a segment of the customer
market that is willing to let considerations of sustainability influence its purchasing decisions.
Following a successful first round of expansion in the Northeast region, Natures Inn is
planning another round of expansion, this time into the Midwest region.
Working with a real estate consultant, Natures Inn has identified 10 potential sites for the
location of new motels. Each site can accommodate either a CE motel or an FS motel (but not
both). Using historical data from the Northeast region, the consultant has estimated the net
present value (NPV) of the cash flows attainable over the next 10 years at each location, with
separate figures for CE and FS.
The consultant has also carried out a survey to explore the extent to which demand might be
affected when two motels are located in close proximity. The first finding was that CE
customers and FS customers are different segments, for the most part, and little crossover
demand occurs. On the other hand, within CE and FS segments, competition occurs when
motels are located too close to each other. The data suggest that competition becomes an
economic factor for CE motels when they are located within 30 miles of each other and for FS
motels within 40 miles of each other. Natures Inn has therefore decided to respect these
distances in their choice of locations: In the Midwest, CE motels will not be located within 30
miles of each other, and FS motels will not be located within 40 miles of each other. The results
of the consultants work are summarized in Exhibit 6.1.
Exhibit 6.1 Proximity Data and Economic Estimates
The task for Natures Inn is now to develop a location plan for its Midwest expansion.
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