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Linear Programming - Assessment Task

Linear Programming

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Krichelle Anne Escarilla II
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30 views1 page

Linear Programming - Assessment Task

Linear Programming

Uploaded by

Krichelle Anne Escarilla II
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MGMT 144n Assessment Task 3.

Formulate the decision variables, objective function, and constraints for each problem. Run the analysis using
any of the methods discussed in this lesson (graphical, using Solver Add-in or LINDO program) and interpret
the results.

1. Innis Investments manages funds for 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 Php1.2 M in two investment
funds: a stock fund and a money market fund. Each unit of the stock fund costs Php50 and provides an annual
rate of return of 10%, each unit of the money market fund costs Php100 and provides an annual rate of return
of 4%. The client wants to minimize risk but earn an annual income from the investment of at least Ph p60,000.
According to Innis’s risk measurement system, each unit purchased in the stock fund has a risk index of 8, and
each unit purchased 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 a riskier investment. Innis’s client also has specified that at least
Php300,000 be invested in the money market fund. How many units of each fund should Innis purchase for the
client if the objective is to minimize the total risk index for the portfolio?

2. The Goodwin Company drills offshore oil wells under contract to large oil companies. The company’s owner,
Jim Goodwin, needs to find an effective way of blending a liquid solution which will provide a non -corrosive
storage medium for the company’s tungsten carbide drill bits. He has found through some experimentation
that two reagents – Algine and Benedroll – when properly blended, will provide an effective solution. One liter
of the solution mix must contain at least 0.2 liter, but no more than 0.6 liter of Algine. The amount of Benedroll
in the one-liter mix must be between 0.2 and 0.6 liter. Jim can obtain the required amount of reagents in the
mix by blending some amount of Yeltzflux and Zinderfud into a low-cost chemically inert solvent. Yeltzflux is a
readily obtained commercial product costing $2.25 per liter; each liter of Yeltzflux contains 0.4 -liter Algine and
0.5-liter Benedroll along with other ingredients. Zinderfud is also readily available for $2.38 per liter, and it
contains 0.7-liter Algine and 0.4-liter Benedroll. How much Yeltzflux and Zinderfud to put in a one-liter blend of
storage solution so the final blend contains the proper levels of reagents at the minimum cost .

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