Practical Management Science
5th Edition
ISBN: 9781305250901
Author: Wayne L. Winston, S. Christian Albright
Publisher: Cengage Learning
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Chapter 6.5, Problem 26P
Summary Introduction
To determine: The optimal solution.
Introduction: The variation between the present value of the
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Please use graphic tools and algebra methods to answer this question
Innis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs.
For a new client, Innis has been authorized to invest up to $1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund costs
$50 and provides an annual rate of return of 10%; each unit of the money market fund costs $100 and provides an annual rate of return of 4%.
The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000.
According to Innis' risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in the money market fund has a risk index of
3. The higher risk index associated with the stock fund simply indicates that it is the riskier investment.
Innis's client also specified that at least $300,000 be invested in the money market fund.
Refer to the computer solution shown below.
Optimal…
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Chapter 6 Solutions
Practical Management Science
Ch. 6.3 - Prob. 1PCh. 6.3 - Prob. 2PCh. 6.3 - Solve Problem 1 with the extra assumption that the...Ch. 6.3 - Prob. 4PCh. 6.3 - Prob. 5PCh. 6.3 - Prob. 6PCh. 6.3 - Prob. 7PCh. 6.3 - Prob. 8PCh. 6.3 - Prob. 9PCh. 6.3 - Prob. 10P
Ch. 6.4 - Prob. 11PCh. 6.4 - Prob. 12PCh. 6.4 - Prob. 13PCh. 6.4 - Prob. 14PCh. 6.4 - Prob. 15PCh. 6.4 - Prob. 16PCh. 6.4 - Prob. 17PCh. 6.4 - Prob. 18PCh. 6.4 - Prob. 19PCh. 6.4 - Prob. 20PCh. 6.4 - Prob. 21PCh. 6.4 - Prob. 22PCh. 6.4 - Prob. 23PCh. 6.5 - Prob. 24PCh. 6.5 - Prob. 25PCh. 6.5 - Prob. 26PCh. 6.5 - Prob. 28PCh. 6.5 - Prob. 29PCh. 6.5 - Prob. 30PCh. 6.5 - In the optimal solution to the Green Grass...Ch. 6.5 - Prob. 32PCh. 6.5 - Prob. 33PCh. 6.5 - Prob. 34PCh. 6.5 - Prob. 35PCh. 6.6 - Prob. 36PCh. 6.6 - Prob. 37PCh. 6.6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60PCh. 6 - Prob. 61PCh. 6 - Prob. 62PCh. 6 - Prob. 63PCh. 6 - Prob. 64PCh. 6 - Prob. 65PCh. 6 - Prob. 66PCh. 6 - Prob. 67PCh. 6 - Prob. 68PCh. 6 - Prob. 69PCh. 6 - Prob. 70PCh. 6 - Prob. 71PCh. 6 - Prob. 72PCh. 6 - Prob. 73PCh. 6 - Prob. 74PCh. 6 - Prob. 75PCh. 6 - Prob. 76PCh. 6 - Prob. 77PCh. 6 - Prob. 78PCh. 6 - Prob. 79PCh. 6 - Prob. 80PCh. 6 - Prob. 81PCh. 6 - Prob. 82PCh. 6 - Prob. 83PCh. 6 - Prob. 84PCh. 6 - Prob. 85PCh. 6 - Prob. 86PCh. 6 - Prob. 87PCh. 6 - Prob. 88PCh. 6 - Prob. 89PCh. 6 - Prob. 90PCh. 6 - Prob. 91PCh. 6 - Prob. 92PCh. 6 - This problem is based on Motorolas online method...Ch. 6 - Prob. 94PCh. 6 - Prob. 95PCh. 6 - Prob. 96PCh. 6 - Prob. 97PCh. 6 - Prob. 98PCh. 6 - Prob. 99PCh. 6 - Prob. 100PCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 3.1CCh. 6 - Prob. 3.2CCh. 6 - Prob. 3.3CCh. 6 - Prob. 3.4CCh. 6 - Prob. 3.5CCh. 6 - Prob. 3.6C
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- If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.arrow_forwardPlease use graphic tools and algebra method to answer this questionarrow_forwardI’ve been able to find the optimal solution and resulting profit with excel solver. But can’t figure out how to set up the problem with POM QMarrow_forward
- Use Excel to solve the linear program, optimal solution and objective function value. A political candidate is planning his media budget for an upcoming election. He has $90,500 to spend. His political consultants have provided him with the following estimate of additional voites as a result of the advertising effort: for every small sign placed by the roadside, he will garner 20 additional votes for every larg sign placed by the roadside, he will garner 30 additional votes for every thousand bumper stickers placed on cars, the will garner 15 additional votes for every hundred personal mailings to voters, he will garner 40 additional votes for every radio ad heard in the last month, he will garner 485 additional votes The costs for each of the advertising devices, along with the practical minimum and maximum that should be planned for each, are shown on the following table. How should the candidate plan to spend his campaign money? Advertising Medium Cost…arrow_forwardTRUE OR FALSE In the simplex minimization method, optimality is signaled by the presence of all positive values in the Cj-Zj rowarrow_forwardPlease do not give solution in image format thankuarrow_forward
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- Can you please solve accurately.arrow_forward1. Write a linear program for the problem. 2. What is the optimal production mix among different coffee varieties and the profit associated with it? 3. What should be the per bag profit of Tarrazu which will make it beneficial to produce this variety? 4. One Cup is considering increasing the weekly bags to 150. If it costs One Cup $3.00 per bag to procure beans of any variety. Conduct sensitivity analysis and determine if One Cup should consider increasing the per week production. 5. Identify the range over which per bag profit of Sumatra and Kona may vary and still retain the current production plan as optimal for One Cup. 6. Once roasted the coffee beans must be preserved properly. To ensure that, One Cup Coffee is considering investing in a vacuum packaging machine for 24 hours/ week. It takes 10, 15 and 10 minutes to pack a bag of Sumatra, Kona and Tarazzu respectively. Identify if the current production plan will suit the installation of the new packaging scheme.arrow_forwardMultiple optimal solutions exist when(choose one below) (a) the objective function's level curves are parallel to a constraint (b) for at least one objective function coefficient, the allowable increase/decrease is zero. (c) for at least one constraint, the shadow price is zero. Both (a) and (b). Both (a) and (c). Both (b) and (c). All (a), (b), (c) are true.arrow_forward
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