Question
Welte Mutual Funds just obtained $100,000 and is looking for investment opportunities. All new investments will either be made in oil, steel, or government bonds.
Welte Mutual Funds just obtained $100,000 and is looking for investment opportunities. All new investments will either be made in oil, steel, or government bonds. The corresponding expected rate of return for each investment type is given as:
Investment | Project Rate of Return % |
Atlantic Oil | 7.3 |
Pacific Oil | 10.3 |
Midwest Steel | 6.4 |
Huber Steel | 7.5 |
Government Bonds | 4.5 |
Furthermore, Weltes management imposes the following investment requirements
1 - Neither Industry (oil or steel should receive more than $50,000)
2 - Government bonds should be at least 25% of the steel investments
3- The investment in Pacific Oil, the high-return but high-risk investment, cannot be more than 60% of the total oil investment
Formulate a linear program (clearly define your decision variables) to maximize the projected returns for this investment problem.
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