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Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a numberof clients. A particular portfolio consists of U shares of U .

Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a numberof clients. A particular portfolio consists of U shares of U.S. Oil and H shares ofHuber Steel. The annual return for U.S. Oil is $3 per share and the annual return forHuber Steel is $5 per share. U.S. Oil sells for $25 per share and Huber Steel sells for$50 per share. The portfolio has $80,000 to be invested. The portfolio risk index(0.50 per share of U.S. Oil and 0.25 per share for Huber Steel) has a maximum of 700.In addition, the portfolio is limited to a maximum of 1000 shares of U.S. Oil. The linearOptimal Objective Value =8400.00000Variable Value Reduced Cost----------------------------------------------U 800.000000.00000H 1200.000000.00000Constraint Slack/Surplus Dual Value----------------------------------------------10.000000.0933320.000001.333333200.000000.00000Objective Allowable AllowableVariable Coefficient Increase Decrease------------------------------------------U 3.000007.000000.50000H 5.000001.000003.50000RHS Allowable AllowableConstraint Value Increase Decrease------------------------------------------180000.0000060000.0000015000.000002700.0000075.00000300.0000031000.00000 Infinite 200.00000programming formulation that will maximize the total annual return of the portfolio isas follows:Max 3U +5H Maximize total annual returns.t.25U +50H <=80000 Funds available0.50U +0.25D<=700 Risk maximum1U <=1000 U.S. Oil maximumThe computer solution of this problem is shown in Figure 3.14.a. What is the optimal solution, and what is the value of the total annual return?b. Which constraints are binding? What is your interpretation of these constraints interms of the problem?c. What are the dual values for the constraints? Interpret each.d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why orwhy not?

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