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Xerox is trying to determine how many maintenance centers are needed in the mid-Atlantic states. Xerox earns $500 profit (excluding the cost of running maintenance centers) on each copier sale. The sales of copiers in each major market (Boston, New York, Philadelphia, Washington, Providence, and Atlantic City) depend on the proximity of the nearest maintenance facility. If a maintenance facility is within 100 miles of a city, sales will be high; if a maintenance facility is within 150 miles of a city, sales will be medium; otherwise, sales will be low. The predicted annual sales (that is, the meaning of low, medium, and high) are listed in the file P08_31.xlsx. It costs $200,000 per year to place a maintenance representative in a city. It is possible to locate a representative in any city except for Atlantic City and Providence. The distances between the cities are listed in the same file. Where should maintenance representatives be located?
Practical Management Science
Practical Management Science
Xerox is trying to determine how many maintenance centers are needed in the mid-Atlantic states. Xerox earns $500 profit (excluding the cost of running maintenance centers) on each copier sale. The sales of copiers in each major market (Boston, New York, Philadelphia, Washington, Providence, and Atlantic City) depend on the proximity of the nearest maintenance facility. If a maintenance facility is within 100 miles of a city, sales will be high; if a maintenance facility is within 150 miles of a city, sales will be medium; otherwise, sales will be low. The predicted annual sales (that is, the meaning of low, medium, and high) are listed in the file P08_31.xlsx. It costs $200,000 per year to place a maintenance representative in a city. It is possible to locate a representative in any city except for Atlantic City and Providence. The distances between the cities are listed in the same file. Where should maintenance representatives be located?
To determine: The location of maintenance representatives.
Introduction: The variation between the present value of the cash outflows and the present value of the cash inflows are known as the Net Present Value (NPV).
Explanation of Solution
Model:
Formulae to determine the model:
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