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:
Model NPV Space Requirement (sq. ft.)
MB345 $2,500 200
MC237 $4,000 250
MY456 $3,500 240
MG231 $1,800 150
MT347 $8,000 450
MF302 $2,000 200
MG201 $2,000 150
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?
Add an PI( profitable index) column and figure out the answers.