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16. Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client has requested that the firm

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16. Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client has requested that the firm handle an $800,000 portfolio. As an initial investment strategy, the client would like to restrict the portfolio to a mix of the following two stocks: Let x= number of shares of Oil Alaska y= number of shares of Southwest Petroleum Appendix 1.1 Using Excel for Breakeven Analysis 23 a. Develop the objective function, assuming that the client desires to maximize the total annual return. b. Show the mathematical expression for each of the following three constraints: (1) Total investment funds available are $800,000. (2) Maximum Oil Alaska investment is $500,000. (3) Maximum Southwest Petroleum investment is $450,000. Note: Adding the x0 and y0 constraints provides a linear programming model for the investment problem. A solution procedure for this model will be discussed in Chapter 7. 17. Models of inventory systems frequently consider the relationships among a beginning inventory, a production quantity, a demand or sales, and an ending inventory. For a given production period j, let sj1xjdjsj=beginninginventoryforperiodj(endinginventoryfromperiodj1,thepreviousperiod)=productionquantityinperiodj=demandinperiodj=endinginventoryforperiodj a. Write the mathematical relationship or model that shows ending inventory as a function of beginning inventory, production, and demand. b. What constraint should be added if production capacity for period j is given by Cj ? c. What constraint should be added if inventory requirements for period j mandate an ending inventory of at least Ij

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