is limited to a maximum of 1000 shares of U.S. Oil. The linear programming formulati 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 1000 U.S. Oil maximum U, H 2 0

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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 s 700 Risk maximum
< 1000 U.S. Oil maximum
1U
U, H 20
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 s 700 Risk maximum < 1000 U.S. Oil maximum 1U U, H 20
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