#7. Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a number of clients. A particular portfolio consists of U shares of U.S. Oil and H shares of Huber Steel. The annual return for U.S. Oil is $3 per share and the annual return for Huber Steel is $5 per share. U.S. Oil sell for $25 per share and Huber Steel sells for $50 per share. The portfolio has $80,000 to be invested. The portfolio risk index (0.50 per share of U.S. Oil and 0.25 per share for Huber Steel) has a maximum of 700 . In addition, the portfolio is limited to a maximum of 1000 shares of U.S. Oil. The linear programming formulation that will maximize the total annual return of the portfolio is as follows:Max 3U + 5H Maximize total annual returns.t. 25U + 50H <= 80,000 Funds Available0.50U + 0.25H <= 700 Risk Maximum1U <= 1000 U.S. Oil maximumU,H >= 0 a. What is the optimal solution value for U?b. What is the optimal solution value for H?c. What is the estimated annual return?
#7. Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a number of clients. A particular portfolio consists of U shares of U.S. Oil and H shares of Huber Steel. The annual return for U.S. Oil is $3 per share and the annual return for Huber Steel is $5 per share. U.S. Oil sell for $25 per share and Huber Steel sells for $50 per share. The portfolio has $80,000 to be invested. The portfolio risk index (0.50 per share of U.S. Oil and 0.25 per share for Huber Steel) has a maximum of 700 . In addition, the portfolio is limited to a maximum of 1000 shares of U.S. Oil. The linear programming formulation that will maximize the total annual return of the portfolio is as follows:
Max 3U + 5H Maximize total annual return
s.t.
25U + 50H <= 80,000 Funds Available
0.50U + 0.25H <= 700 Risk Maximum
1U <= 1000 U.S. Oil maximum
U,H >= 0
a. What is the optimal solution value for U?
b. What is the optimal solution value for H?
c. What is the estimated annual return?
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