Bob and Dora Sweet wish to start investing $1,000 each month. The Sweets are looking at five investment plans

and wish to maximize their expected return each month. Assume interest rates remain fixed and once their

investment plan is selected they do not change their mind. The investment plans offered are:

Fidelity 9.1% return per year

Optima 16.1% return per year

CaseWay 7.3% return per year

Safeway 5.6% return per year

National 12.3% return per year

Since Optima and National are riskier, the Sweets want a limit of 30% per month of their total investments

placed in these two investments. Since Safeway and Fidelity are low risk, they want at least 40% of their

investment total placed in these investments.

What would be a recommended mixture of investment plans for Bob and Dora Sweet based on their requirements?

Formulate the LP model for this problem and tell me (What would be the Objective, what would be the variables, and what would the constraints/subject to be? Write out the formula)

ANSWER:

MAX: 0.091X1 + 0.161X2 + 0.073X3 + 0.056X4 + 0.123X5

Subject to:

X1 + X2 + X3 + X4 + X5 = 1000

X2 + X5 < 300

X1 + X4 > 400

X1, X2, X3, X4, X5 > 0