Assignment 3: Finding Locations for New Downton Entertainment's Restaurants

Downton Entertainment owns and operates several different restaurant chains including Blue Crab
and Venice. The company is considering opening a number fo new units in Illinois. There are ten sites
available for the company to build new restaurants and the company can build either type of
restaurant at a given site. The following table summarizes the estimated net present value (NPV) of
the cash flows resulting from locating each type of restaurant at each of the sites and also indicate
which sites are within 15 miles of each other.

Blue Crab Venice Other Sites

Site NPV NPV within 15 miles
1 $ 11.8 $ 16.2 2, 3, 4
2 $ 13.3 $ 13.8 1, 3, 5
3 $ 19.0 $ 14.6 1, 2, 4, 5
4 $ 17.8 $ 12.4 1, 3
5 $ 10.0 $ 13.7 2, 3, 9
6 $ 16.1 $ 19.0 7
7 $ 13.3 $ 10.8 6, 8
8 $ 18.8 $ 15.2 7
9 $ 17.2 $ 15.9 5, 10
10 $ 14.4 $ 16.8 9

Suppose the company does not want to build two units from the same chain within 15 miles of each
other (for example, it does not want to build two Blue Crabs within 15 miles of each other nor is it
willing to build two Venices within 15 miles of each other). Determine which (if any) restaurant the
company should build at each site in order to maximize the total NPV.
Bojectives

decsion Blue Venice blue choen site 1 2 3 4

$ 11.8 $ 16.2 0 1 1 1 1 1 1
$ 13.3 $ 13.8 0 0 2 1 1 1
$ 19.0 $ 14.6 0 0 3 1 1 1 1
$ 17.8 $ 12.4 0 0 4 1 1 1
$ 10.0 $ 13.7 0 0 5 1 1
$ 16.1 $ 19.0 0 1 6
$ 13.3 $ 10.8 0 0 7
$ 18.8 $ 15.2 0 0 8
$ 17.2 $ 15.9 0 0 9
$ 14.4 $ 16.8 0 1 10

1. no blue

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2. blue cash can be with 15 miles

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2
 5 6 7 8 9 10

1
1

1 1
1 1
1 1 1
1 1 1 1
1 1 1

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