Lauren Moore has sold her business for $500,000 and wants to spend in condominium units (which she intends to rent) and land (which she will lease to the farmer). She estimates that she will get an annual return of $8,000 for each condominium and $6,000 for each acre of land. A condominium unit costs $70,000, and land costs $30,000 per acre. A condominium will cost her $1,000 per unit, acre of land will cost $2,000 for maintenance and upkeep, and $14,000 has been budgeted for such annual expenses. Lauren wishes to know how much to spend in condominiums and land to maximize her annual return.
a. Formulate mixed integer programming model for this problem.
b. Solve this model using computer.