Recall the model developed in the class for the Refinery Blending Problem Minimize 0.1 R1 + 0.15 R2 +0.1 H1 +0.15 H2 Subject to (DEM_REG) 800000 (DEM_HO) = 500000 (REG_COMP) >= 320000 (HO_COMP) = 0 1 H1 + 1 H2 0.6 H1 +0.3 H2 (a) Use SOLVER to obtain the solution. What is the optimum solution and the cost? (b) If the refinery just realized that it has only 500,000 gallons of crude oil 1. Can you still use the refinery plan found in (a)? If not, modify your model to incorporate this constraint and re-solve using SOLVER The Mathematical model for this problem is: Let: B1 = Amount (S) invested in Bond-1 B2 = Amount ($) invested in Bond-2 B3 Amount (S) invested in Bond-3 B4 = Amount (S) invested in Bond-4 Objective: Maximize Expected total return for the first year Maximize 0.13B1 +0.08B2+0.12B3 +0.14B4 Constraints: 1. Budget: Total investment should be $1000000 B1 + B2+B3+ B4 = 1000000 2. Worst Case Return should exceed 0.08 Simplifying this constraint, we get: 0.0681+0.0882+0.108300984 1000000 3. Average duration should not exceed 6 381 482 783-984 1000000 -56 simplifying this constraint, we get: 1000000 0.0681+0.0882+0.1083 +0.098420.08*1000000 B1 4. Diversity constraint: Investment in each bond cannot exceed 40% of Total Investment. Bond-1: B1 400000 381+482+783+9846*1000000 Likewise: Bond-2: B2 400000 Bond-3: B3 400000 Bond-4: B4 400000 5. Logical Constraints: B1, B2, B3, B40 Putting everything together, the model is: Maximize 0.13B1+0.08B2+0.12B3 +0.14B4 Constraints: 0.08 + B2 +B3 +B4= 0.0681+0,0882+0.1083+0.09840.08 1000000