original question

WELTE MUTUAL FUNDS

Welte Mutual Funds, Inc., located in New York City has just obtained $100,000 by converting industrial bonds to cash and is now looking for other investment opportunities for these funds. Based on Weltes current investments, the firms top financial analyst recommends that all new investments be made in the oil industry, steel industry, or in government bonds. Specifically, the analyst has identified five investment opportunities and projected their annual rate of return. The investments and rates of return are shown in the following table:

INESTMENT OPPORTUNTIES FOR WELTE MUTUAL FUNDS

Investment	Projected rate of return %
Atlantic Oil	7.3
Pacific Oil	10.3
Midwest Steel	6.4
Huber steel	7.5
Government bonds	4.5

Management of Welte imposed the following investment guidelines:

1.Neither industry (oil or steel) should receive more than $50,000.

2.Government bonds should be at least 25%of the steel industry investment.

3.The investment in Pacific Oil, the high-return but high-risk investment cannot be more than 60% of the total oil industry investment.

Questions:

(A) Formulate a Linear-programming Model for Welte Mutual Funds.

(B) What portfolio recommendations __investments and amounts __should be made for the available $100,000? Provide your Excel solution along with all the reports generated through Excel.

(C) Write a report that explains your findings.

the following question needs answering

Reconsider the Welte Mutual Funds problem from Section 9.2. Define your decision variables as the fraction of funds invested in each security. Also, modify the constraints limiting investments in the oil and steel industries as follows: No more than 50% of the total funds invested in stock (oil and steel) may be invested in the oil industry, and no more than 50% of the funds invested in stock (oil and steel) may be invested in the steel industry. a. Solve the revised linear programming model. What fraction of the portfolio should be invested in each type of security? b. How much should be invested in each type of security? c. What are the total earnings for the portfolio? d. What is the marginal rate of return on the portfolio? That is, how much more could be earned by investing one more dollar in the portfolio?

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