Question
Supply chain finance is a new and important field. Lets say you just got hired as a SCM analyst tasked with a finance initiative. You
Supply chain finance is a new and important field. Lets say you just got hired as a SCM analyst tasked with a finance initiative. You have to select a portfolio package from a set of alternative investments. Your goals are to:
Maximization of the expected return or minimization of the risk
Not exceeding the available capital
Managing the companys (risk) policy
Consider the duration of investments economic life, potential growth rate, danger, liquidity
You have been given the following expected return information:
Investment | Expected annual return rate |
Share A-Manufacturing sector | 15.4 |
Share B-manufacturing sector | 19.2 |
Share C-food & beverage sector | 18.7 |
Share D-food & beverage sector | 13.5 |
mutual fund E | 17.8 |
mutual fund Z | 16.3 |
You also have the following requirements:
Total amount of capital= $90,000
Amount in shares of a sector no larger than 50% of total available
Amount in shares with the larger return of a sector less or equal to 80% of sectors total amount
Amount in manufacturing company less or equal to 10% of the whole share amount
Amount in mutual funds less or equal to 25% of the amount in manufacturing shares
Therefore, you must:
Formulate the problem, complete with the objective function and appropriate constraints and be sure to clearly label your decision variables.
Solve this problem in excel with solver
Write a few sentences describing what the results say, in plain language.
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