16. The American Radio Relay League is using a binary linear programming

(BLP) formulation to select from among several possible investments. Each investment continues for 5 years. Given the incomplete SOLVER parameter box shown, respond to parts a–f below in order to obtain the optimum investment portfolio. Assume $180,000 is available for investment and all investments are indivisible.

a. Specify the contents of the target cell.

b. Specify the contents for By Changing Cells.

c. Specify all constraints to be added.

d. Now, suppose the original problem is modifi ed so that investments 4 and 5 are mutually exclusive. Show how you would incorporate that constraint in SOLVER.

e. Now, suppose the original problem is modifi ed so that investment 6 is contingent on investment 5 being pursued. Show how you would incorporate that constraint in SOLVER.

f. Now, suppose the original problem is modifi ed so that exactly 3 investments must be pursued. Show how you would incorporate that constraint in SOLVER.

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A B E 9 H H 1 2 LINEAR PROGRAMMING FORMULATION FOR A CAPITAL BUDGETING PROBLEM 3 INVESTMENT OPPORTUNITY 1 4 INITIAL INVESTMENT 5 ANNUAL RETURN 6 SALVAGE VALUE 7 PRESENT WORTH 8 INTERNAL RATE OF RETURN 9 VALUE OF X 10 PORTFOLIO INVESTMENT 11 PORTFOLIO PRESENT WORTH 12 MARR 13 INVESTMENT PERIOD 2 3 4 5 6 $25,000.00 $35,000.00 $30,000.00 $40,000.00 $60,000.00 $50,000.00 $2,600.00 $3,750.00 $3,050.00 $4,775.00 $6,750.00 $5,850.00 $25,000.00 $35,000.00 $30,000.00 $40,000.00 $60,000.00 $50,000.00 $379.08 $189.54 $2,937.86 $2,843.09 $3,222.17 10.40% 1 $947.70 10.71% 1 10.17% 1 11.94% 1 11.25% 1 11.70% 1 $25,000.00 $35,000.00 $30,000.00 $40,000.00 $60,000.00 $50,000.00 $240,000.00 $379.08 $947.70 $189.54 $2,937.86 $2,843.09 $3,222.17 $10,519.43 CONSTRAINT $180,000.00 10% 5 Solve Close Guess Options Add Change Reset All Delete Help 14 15 Solver Parameters 16 17 Set Target Cell: 18 Equal To: Max Min Value of: 0 19 By Changing Cells: 20 21 22 23 Subject to the Constraints: 24 25 26 27 28 > 29 30 31