Homework Help is Here – Start Your Trial Now!
Business
Operations Management
d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why or why not?

d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why or why not?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
See similar textbooks
icon
Related questions
Question
100%

I only need d)

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 sells 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: Маx 3U + 5H Maximize total annual return s.t. 25U + 50H < 80,000 Funds available 0.50U + 0.25D < 700 Risk maximum 1U < 1000 U.S. Oil maximum U, H > 0
Transcribed Image Text: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 sells 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: Маx 3U + 5H Maximize total annual return s.t. 25U + 50H < 80,000 Funds available 0.50U + 0.25D < 700 Risk maximum 1U < 1000 U.S. Oil maximum U, H > 0
FIGURE 3.14 THE SOLUTION FOR THE INVESTMENT ADVISORS PROBLEM Optimal Objective Value = 8400.00000 Variable Value Reduced Cost 800.00000 0.00000 H 1200.00000 0.00000 Constraint Slack/Surplus Dual Value 1 0.00000 0.09333 2 0.00000 1.33333 200.00000 0.00000 Objective Allowable Allowable Variable Coefficient Increase Decrease 3.00000 7.00000 0.50000 H 5.00000 1.00000 3.50000 RHS Allowable Allowable Constraint Value Increase Decrease 1 80000.00000 60000.00000 15000.00000 700.00000 75.00000 300.00000 3. 1000.00000 Infinite 200.00000 The computer solution of this problem is shown in Figure 3.14. a. What is the optimal solution, and what is the value of the total annual return? b. Which constraints are binding? What is your interpretation of these constraints in terms of the problem? c. What are the dual values for the constraints? Interpret each. d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why or why not?
Transcribed Image Text:FIGURE 3.14 THE SOLUTION FOR THE INVESTMENT ADVISORS PROBLEM Optimal Objective Value = 8400.00000 Variable Value Reduced Cost 800.00000 0.00000 H 1200.00000 0.00000 Constraint Slack/Surplus Dual Value 1 0.00000 0.09333 2 0.00000 1.33333 200.00000 0.00000 Objective Allowable Allowable Variable Coefficient Increase Decrease 3.00000 7.00000 0.50000 H 5.00000 1.00000 3.50000 RHS Allowable Allowable Constraint Value Increase Decrease 1 80000.00000 60000.00000 15000.00000 700.00000 75.00000 300.00000 3. 1000.00000 Infinite 200.00000 The computer solution of this problem is shown in Figure 3.14. a. What is the optimal solution, and what is the value of the total annual return? b. Which constraints are binding? What is your interpretation of these constraints in terms of the problem? c. What are the dual values for the constraints? Interpret each. d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why or why not?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.
SEE MORE TEXTBOOKS