Question

In: Advanced Math

Use the simplex method to solve the following linear programming problems. Clearly indicate all the steps,...

Use the simplex method to solve the following linear programming problems. Clearly indicate all the steps, the entering and departing rows and columns and rows, the pivot and the row operations used. An investor has up to N$450,000 to invest in three types of investments. Type A pays 6% annually and has a risk factor of 0. Type B pays 10% annually and has a risk factor of 0.06. Type C pays 12% annually and has a risk factor of 0.08. To have a well-balanced portfolio, the investor imposes the following conditions. The average risk factor should be no greater than 0.05. Moreover, at least one-half of the total portfolio is to be allocated to Type A investments and at least one-fourth of the portfolio is to be allocated to Type B investments. How much should be allocated to each type of investment to obtain a maximum return?

Solutions

Expert Solution

Thus to obtain maximum profit investors invest $225000 in A, $112500 in B and $112500 in C and get maximum profit $38250


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