You own a car dealership and are trying to decide how to configure the showroom

Question

You own a car dealership and are trying to decide how to configure the showroom floor. The floor has 2000 square feet of usable space. You have hired an analyst and asked her to estimate the NPV of putting a particular model on the floor and how much space each model requires: In addition, the showroom also requires office space. The analyst has estimated that office space generates a NPV of $14 per square foot. What models should be displayed on the floor and how many square feet should be devoted to office space? Complete the PI table below" (Round to two decimal places.) MT347 and MY456 All the models should be displayed. The number of square feet that should be devoted to the office space is sq. ft. (Round to the nearest integer.)

Explanation / Answer

All Amounts in $ PI Table completed Model NPV Space PI Minimum $ Reqt NPV (sq.ft.) MB345 3000 200 15.0 14 MC237 5000 250 20.0 14 MY456 4000 240 16.7 14 MG231 1000 150 6.7 14 MT347 6000 450 13.3 14 MF302 4000 200 20.0 14 MG201 1500 150 10.0 14 Models to be displayed on the floor, considering a base NPV of $ 14 per square feet, will be MB345, MC237, MY456 and MF302. The total square feet devoted to office space will be = 2,000 - 200 - 250 - 240 - 200 = 1110 sq. ft.

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