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Bpre (2) - Merged

The document outlines an investment planning problem for maximizing returns over five years using activities A, B, C, and D. It formulates a linear programming model with decision variables, an objective function to maximize total returns, and constraints related to budget and investment opportunities. The investor starts with $60,000 and seeks to determine the best investment strategy.

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Rashmi Singh
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13 views4 pages

Bpre (2) - Merged

The document outlines an investment planning problem for maximizing returns over five years using activities A, B, C, and D. It formulates a linear programming model with decision variables, an objective function to maximize total returns, and constraints related to budget and investment opportunities. The investor starts with $60,000 and seeks to determine the best investment strategy.

Uploaded by

Rashmi Singh
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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G.L. Bajaj Institute of Management &Research.

PGDM Institute
Approved by A.I.C.T.E., Ministry of HRD, Govt. of India
Plot No. 2, Knowledge Park-III, Greater Noida
PGDM /PGDM (GENE RAL) BATCH-2022-24

(Subject Name: Business Process Re-Engineering-BPRE)

Term- V
PGDM Batch 2022-24

Submitted by: Rashmi Kumari Submitted To Mr. Ravi Ranjan


Admission No: PGDM22006
Roll No: GM22003
Question

Investment Planning

•An investor has money-making activities A and B available at the

Beginning to each of the next five years.

•Each dollar invested in A at the beginning of a year returns $1.4two

Years later.

•Each dollar invested in B at the beginning of a year returns $1.7three

Years later.

•In addition, investment opportunities C and D will each be available

Only once in future.

•Each dollar invested in Catthebeginningofyear2returns$1.90at

The end of year 5.

•Each dollar invested in D at the beginning g of year 5 returns $1. 3 at the end of year 5.

• The invest or begins with $60,000 and wishes to know which investment plan maximizes the amount
of money at the end of five years.

•Formulate the problem as a linear program.


Answer-

Investment Planning Linear Program for Assignment

Step 1: Decision Variables

Let's define decision variables to represent the amount invested in each activity:

 A_i: Amount invested in activity A in year i (i = 1, 2, 3, 4, 5)


 B_i: Amount invested in activity B in year i (i = 1, 2, 3, 4)
 C: Amount invested in activity C in year 2
 D: Amount invested in activity D in year 5

Step 2: Objective Function

We want to maximize the total amount of money at the end of year 5. This includes:

 Money earned from investments A and B


 Money earned from investments C and D (if made)
 Initial investment remaining

Therefore, the objective function is:

Maximize 1.4 * (A_1 + A_2 + A_3 + A_4) + 1.7 * (B_2 + B_3 + B_4) + 1.9 * C + 1.3 * D
+ 60000 (A_5 + B_5)

Step 3: Constraints

 Budget constraint: The total amount invested in each year cannot exceed the available
funds:
A_i + B_i <= 60000 (i = 1, 2, 3, 4)
A_5 + B_5 + C + D <= 60000 + 1.4A_4 + 1.7B_4

This accounts for the remaining funds from previous years' investments.

 Non-negativity constraints: The amount invested cannot be negative:


A_i, B_i, C, D >= 0 (i = 1, 2, 3, 4, 5)
 Investment opportunity constraints: Activities C and D can only be invested in
once:
C = 0 or C = 60000
D = 0 or D = 60000

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