Bhavika Investments, a group of financial advisors and retirement planners, has been requested to provide advice on how to invest $200,000 for one of its clients. The client has stipulated that the money must be put into either a stock fund or a money market fund, and the annual return should be at least $14,000. Other conditions related to risk have also been specified, and the following linear program was developed to help with this investment decision:

The QM for Windows output is shown below.
(a) How much money should be invested in the money market fund and the stock fund? What is the total risk?
(b) What is the total return? What rate of return is this?
(c) Would the solution change if risk measure for each dollar in the stock fund were 14 instead of 12?
(d) For each additional dollar that is available, how much does the risk change?
(e) Would the solution change if the amount that must be invested in the money market fund were changed from $40,000 to$50,000?

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Minimize risk 12S 5M subject to S+ M200,000 total investment is $200,000 0.10s0.05M 14,000 return must be at least $14,000 at least $40,000 must M 40,000 in money market fund where s dollars invested in stock fund M- dollars invested in money market fund Bhavika Investments Solution RHS Dual 12 Minimize Constraint 1 Constraint 2 Constraint 3 Solution-> 200000 14000 40000 1560000 0.05 -140 80000 120000.0 Bhavika Investments Solution Variable Value Reduced Cost Original ValLower Bound Upper Bound 80000 120000.0 Dual Value Constraint Constraint 1 Constraint 2 Constraint 3 12 Slack/SuplsOriginal Val Lower Bound Upper Bound 280000 18000 Infnity120000.0 200000 14000 40000 160000 10000 -140 80000.01