E-education is a new start-up that develops, and markets MBA courses offered over the internet. The company is currently located in Chicago and employs 150 people. Due to strong growth, the company needs additional office space. The company has the option of leasing additional space at its current location in Chicago for the next two years, but after that will need to move to a new building. Another option the company is considering is moving the entire operation to a small Midwest town immediately. A third option for the company is to lease a new building in Chicago immediately. If the company goes for first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Chicago or move to the small Midwest town. The following are some additional facts about the alternatives and the current situation. a) The company has a 75 percent chance of surviving the next two years. b) Leasing the new space for two years at the current location in Chicago would cost $750,000 per year. c) Moving the entire operation to a Midwest town would cost $1million. Leasing space would run only $500,000 per year. d) Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost $650,000 per year. e) The company can cancel the lease at any time. f) The company will build its own building in five years, if it survives. g) Assume all other costs and revenues are the same no matter where the company is located. Question: What should E-education do?
E-education is a new start-up that develops, and markets MBA courses offered over the internet. The company is currently located in Chicago and employs 150 people. Due to strong growth, the company needs additional office space. The company has the option of leasing additional space at its current location in Chicago for the next two years, but after that will need to move to a new building. Another option the company is considering is moving the entire operation to a small Midwest town immediately. A third option for the company is to lease a new building in Chicago immediately. If the company goes for first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Chicago or move to the small Midwest town. The following are some additional facts about the alternatives and the current situation. a) The company has a 75 percent chance of surviving the next two years. b) Leasing the new space for two years at the current location in Chicago would cost $750,000 per year. c) Moving the entire operation to a Midwest town would cost $1million. Leasing space would run only $500,000 per year. d) Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost $650,000 per year. e) The company can cancel the lease at any time. f) The company will build its own building in five years, if it survives. g) Assume all other costs and revenues are the same no matter where the company is located. Question: What should E-education do?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter6: Optimization Models With Integer Variables
Section: Chapter Questions
Problem 100P
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E-education is a new start-up that develops, and markets MBA courses offered over the internet. The company is currently located in Chicago and employs 150 people. Due to strong growth, the company needs additional office space. The company has the option of leasing additional space at its current location in Chicago for the next two years, but after that will need to move to a new building. Another option the company is considering is moving the entire operation to a small Midwest town immediately. A third option for the company is to lease a new building in Chicago immediately. If the company goes for first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Chicago or move to the small Midwest town.
The following are some additional facts about the alternatives and the current situation.
a) The company has a 75 percent chance of surviving the next two years.
b) Leasing the new space for two years at the current location in Chicago would cost $750,000 per year.
c) Moving the entire operation to a Midwest town would cost $1million. Leasing space would run only $500,000 per year.
d) Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost $650,000 per year.
e) The company can cancel the lease at any time.
f) The company will build its own building in five years, if it survives.
g) Assume all other costs and revenues are the same no matter where the company is located.
Question:
What should E-education do?
The following are some additional facts about the alternatives and the current situation.
a) The company has a 75 percent chance of surviving the next two years.
b) Leasing the new space for two years at the current location in Chicago would cost $750,000 per year.
c) Moving the entire operation to a Midwest town would cost $1million. Leasing space would run only $500,000 per year.
d) Moving to a new building in Chicago would cost $200,000, and leasing the new building’s space would cost $650,000 per year.
e) The company can cancel the lease at any time.
f) The company will build its own building in five years, if it survives.
g) Assume all other costs and revenues are the same no matter where the company is located.
Question:
What should E-education do?
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