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Formulate a LP model for the OECS bank that will maximize net returns from the loans division and a separate model for the Mutual Funds Division including ratio constraints. 1. Home loans must equal at least 50% of the personal, car and homes loans. 2. The bank also has a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 5 % 3. Generate the non-negative constraint

Formulate a LP model for the OECS bank that will maximize net returns from the loans division and a separate model for the Mutual Funds Division including ratio constraints. 1. Home loans must equal at least 50% of the personal, car and homes loans. 2. The bank also has a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 5 % 3. Generate the non-negative constraint

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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OECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to finance its loan portfolio. Its operations manager is asked to build an LP model to help guide company decisions as to how to disburse the revolving fund across different loan categories. The operations manager garnered the following data on available types of loans based on market research of the industry: Types of loan Personal Car Interest rate Bad debt ratio 0.15 .10 0.20 0.04 Home Small and medium enterprises 0.25 Commercial 0.17 0.02 0.15 0.10 0.02 The Bank's net return is interest rate net of Bad debt. Revenue from interest is gained only from good loans. The mutual funds Division has allocated $5.0M and is currently looking for investment opportunities to invest these funds, The financial analyst suggested that all new investments be made in the oil industry, steel industry or in government bonds. The analyst identified five investment opportunities: two from the oil industry, two from the steel and government bonds. Types of opportunities АВС oil XZY oil Mona steel Returns 0.095 0.085 0.04 TNT steel 0.05 Government Bonds 0.015 Formulate a LP model for the OECS bank that will maximize net returns from the loans division and a separate model for the Mutual Funds Division including ratio constraints. 1. Home loans must equal at least 50% of the personal, car and homes loans. 2. The bank also has a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 5 % 3. Generate the non-negative constraint
Transcribed Image Text:OECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to finance its loan portfolio. Its operations manager is asked to build an LP model to help guide company decisions as to how to disburse the revolving fund across different loan categories. The operations manager garnered the following data on available types of loans based on market research of the industry: Types of loan Personal Car Interest rate Bad debt ratio 0.15 .10 0.20 0.04 Home Small and medium enterprises 0.25 Commercial 0.17 0.02 0.15 0.10 0.02 The Bank's net return is interest rate net of Bad debt. Revenue from interest is gained only from good loans. The mutual funds Division has allocated $5.0M and is currently looking for investment opportunities to invest these funds, The financial analyst suggested that all new investments be made in the oil industry, steel industry or in government bonds. The analyst identified five investment opportunities: two from the oil industry, two from the steel and government bonds. Types of opportunities АВС oil XZY oil Mona steel Returns 0.095 0.085 0.04 TNT steel 0.05 Government Bonds 0.015 Formulate a LP model for the OECS bank that will maximize net returns from the loans division and a separate model for the Mutual Funds Division including ratio constraints. 1. Home loans must equal at least 50% of the personal, car and homes loans. 2. The bank also has a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 5 % 3. Generate the non-negative constraint
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