Question

****PLEASE SOLVE LP IN EXCEL****

The Strategic Investment Corporation is developing a mix of investments to meet the needs of a client with one million dollars to invest. A mix of five investments is being considered, with data on each as shown below: Average Maximum Minimum Investment Annual Return Investment Investment A 10% 500,000 none B 12% 275,000 none C 16% 250,000 5,000 D 14% 125,000 10,000 E 9% none 5,000 The total average return must be at least 12.5%, all the money must be invested, and investments A and B together must not be over $700,000. Formulate the LP formulation for this problem. ANSWER: X1 = dollars invested in A; X2 = in B; X3 = in C; X4 = in D; X5 = in E

Answer 1

Let the following notations be applicable for the LP Problem X1 Dollars invested in A X2 Dollars invested in B X3 Dollars invested in C X4 Dollars invested in D X5 Dollars invested in E Maximise X1*10%+ X2*12%+ X3*16%+ X4*14%+ X5*9%   subject to the following Since the Corporation has $ 1M to invest, hence X1+X2+X3+X4+X5<=1000000 According to the given conditions, Investment Maximum Investment Minimum Investment Annual Return A 500000 0 10% B 275000 0 12% C 250000 5000 16% D 125000 10000 14% E 0 5000 9% i.e. X1<=500000 & X1>=0 X2<= 275000 & X2>=0 X3<= 250000 & X3>=5000 X4<= 125000 & X4>=10000 X5<= 0 & X5>=5000 Average Required Return >=12.5% i.e. X1*10%+ X2*12%+ X3*16%+ X4*14%+ X5*9% >=12.5% Since the Total of Investment to be made in A and B must not exceed $700000 i.e. X1+X2<=700000