QUESTION 1 Jeff is willing to invest $5000 in buying shares and bonds of a company to gain maximum returns. From his past experience, he estimates...
Jeff is willing to invest $5000 in buying shares and bonds of a
company to gain maximum returns. From his past experience,
he estimates the relationship between returns and investments
made in this company to be:
= total returns in thousands of dollars
= thousands of dollars spent on Shares
= thousands of dollars spent on Bond
Jeff would like to develop a strategy that will lead to
maximum return subject to the restriction provided on amount
available for investment.
What is the value of return if $3,000 is invested in shares
and $2,000 is invested bonds of the company?
Formulate an optimization problem that can be solved to
maximize the returns subject to investing no more than
$5,000 on both share and bonds.
Determine the optimal amount to invest in shares and
bonds of the company. How much return will Jeff gain?
Round all your answers to two decimal places.
Consider the objective function,
capital input share of contribution for
= capital input share of contribution for
Ã¡ = 0.33, Ã¢
= 10 and each unit of labor
costs $45 and each unit of capital costs $55. With $50,000
available in the budget, develop an optimization model to
determine the number of units of capital and labor required in
order to maximize output.
Find the optimal solution to the model you formulated in
part a. Round all your answers to two decimal places. (Hint:
When using Excel Solver, use the Multistart option with
bounds 0 Â£
Â£ 700 and 0 Â£
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