Question
TradingCo wants to invest at most $10,000 in 2021. Two investment options are proposed: KTS and DB, with annual yields of 20% and 10% respectively.
TradingCo wants to invest at most $10,000 in 2021. Two investment options are proposed: KTS and DB, with annual yields of 20% and 10% respectively. Based on market research, TradingCo wishes to limit the amount invested in KTS to no more than 60% of the total investment.
Let X1 be KTS
Let X2 be DB
Max Z: Z = 0.2X1 + 0.1X2
X1 + X2 <= $10,000 (Constrant 1)
0.4X1 - 0.6X2 <=0 (Constrant 2)
X1,X2 >=0 (non-negative constrants)
Suppose that TradingCo imposes one more restriction: investment in DB should be at leastatimes the investment in KTS where ais a non-negative constant. Find the optimal solution to the problem and discuss how the value of a would affect TradingCo's best investment decision and annual yield. (Use the graphical method and solve for the optimal solution in terms of a)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started