7/22/2019 Dm Group 2 Assignment A061

1/7

ASHISH THAKOR

A061

GROUP 2

1

DECISION MAKING MAJOR ASSIGNMENT

GROUP 2

Q. 18a [Page 212]

Objectiveis to minimize the monthly operating expense using formula:

=(F4*F7)+(G4*G7)+(H4*H7)

Subject tothe following constraints:

1. $600,000 available to buy trucks

7/22/2019 Dm Group 2 Assignment A061

2/7

ASHISH THAKOR

A061

GROUP 2

2

Solver Function

Answer

a. Number of trucks to be purchased:i. Super Tankers - 5

ii. Regular Lines - 2iii. Econo-Tankers - 3

Sensitivity Analysis

The optimal solution is valid for the following lower and upper ranges of investments:

Q. 18a [Page 212]

Without the constraints of number of Super Tankers and Econo-Tankers:

Excel Model

7/22/2019 Dm Group 2 Assignment A061

3/7

ASHISH THAKOR

A061

GROUP 2

3

Solver Function

Answer

a. Number of trucks to be purchased:i. Super Tankers - 8

ii. Regular Lines - 0iii. Econo-Tankers0

Sensitivity Analysis

The optimal solution is valid for the following lower and upper ranges of investments:

7/22/2019 Dm Group 2 Assignment A061

4/7

ASHISH THAKOR

A061

GROUP 2

4

Q.9 [Pg 207]a. Solve the revised linear programming model. What fraction of the portfolio should be

invested in each type of security?

b. How much should be invested in each type of security?

c. What are the total earnings for the portfolio?

d. What is the marginal rate of return on the portfolio? That is, how much more could be earned by

investing one more dollar in the portfolio?

SOLUTION

a. Let each decision variable, A, P, M, H and G, represent the fraction or proportion of the total

investment placed in each investment alternative.

Max .073A + .103P + .064M + .075H + .045G

s.t.

A + P + M + H + G = 1

.5A + .5P - .5M - .5H 0

-.5A - .5P + .5M + .5H 0

- .25M - .25H + G 0

-.6A + .4P 0

A, P, M, H, G 0

Solution: Objective function = 0.079 with

Atlantic Oil = 0.178

Pacific Oil = 0.267

Midwest Oil = 0.000

7/22/2019 Dm Group 2 Assignment A061

5/7

ASHISH THAKOR

A061

GROUP 2

5

Huber Steel = 0.444

Government Bonds = 0.111

b. For a total investment of $100,000, we show

Atlantic Oil = $17,800

Pacific Oil = 26,700

Midwest Oil = 0.000

Huber Steel = 44,400

Government Bonds = 11,100

Total $100,000

c. Total earnings = $100,000 (.079) = $7,900

d. Marginal rate of return is .079

7/22/2019 Dm Group 2 Assignment A061

6/7

ASHISH THAKOR

A061

GROUP 2

6

Solved in excel :

Solver

7/22/2019 Dm Group 2 Assignment A061

7/7

ASHISH THAKOR

A061

GROUP 2

7

Sensitivity report