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castortr0y [4]
3 years ago
13

Construction ManagementA construction company is building a new neighborhood, and they are currently working on the design. Each

house will be built using one of three main materials (e.g., wood, brick, or concrete), but no side-by-side houses can be made of the same material. Because each house will be of varying size and complexity, the cost of the materials for each house varies. Given the cost of using each material for each house, what is the minimum cost needed to complete the neighborhood
Business
1 answer:
VLD [36.1K]3 years ago
7 0

Answer:

Answer is described below.

Explanation:

POINTS TO NOTE:

1. Each house will be built using one (only one) of three major building materials - wood, brick, concrete.

2. The linear (in a line or side-by-side) arrangement of the houses will be such that no house will have the same material as the one beside it.

3. The cost of materials for each house will vary.

ANSWER: The minimum cost needed to complete the neighborhood depends on two things;

- The cost of each type of house (cost of a wood house, cost of a brick house, cost of a concrete house)

- The number of each type of house to be built. Or, the number of houses to be built; bearing in mind that they must be arranged without consecutive repetition. Hence, how much will a wood house cost? How much will a brick house cost? How much will a concrete house cost?

Knowing these, the minimum cost needed to complete the neighborhood can be found. If it's going to be 6 houses in the neighborhood for instance and a wood house costs $40, a brick house costs $50 and a concrete house costs $60; the minimum cost to set up the neighborhood will be:

2(40) + 2(50) + 2(60) = 80+100+120 = $300

The number of each type of house will be 2 because same-material houses cannot stay side-by-side. If the rule wasn't there and all the houses were to be concrete, the total cost would be 6(60) = $360

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Answer:

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Explanation:

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Quantity  Total benefit   Marginal benefit     Total Cost     Marginal Cost

0 Units            0                     0                              0                       0

1 Units            16                    16                              9                       9

2 Units           32                   16                             20                      11

3 Units           48                   16                             33                      13

4 Units           64                   16                             48                      15

5 Units           80                   16                             65                      17

We can see that at 4 Units, marginal revenue is almost equal to marginal cost. At this level of production, we have maximum benefits generated which is:

Maximum Benefit Generated = ($16 - $9)   +  ($16 - $11)   + ($16 - $13)  + ($16 - $15) = $7 + $5 + $3 + $1 = $16 for 4 Units

We can also cross check by considering 5 units case to assess whether the benefit generated is more than 4 units case or not.

Maximum Benefit Generated (For 5 Units) = ($16 - $9)   +  ($16 - $11)   + ($16 - $13)  + ($16 - $15)  +  ($16 - $17) = $7 + $5 + $3 + $1 - $1 = $15 for 4 Units

As the maximum benefit generated in the case of 4 units is more because of using marginal revenue = Marginal Cost relation, hence the optimal quantity is 4 units.

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