Define the constraints and variables

Assignment Help Operation Management

Reference no: EM132297271

The upper management of a bank has set the following bank loan policy for the next year. The maximum budget allocated for loans is set to $200 million. The company offers the following type of loans: Personal, Car, Home, Farm, Commercial. The bank has decided to set the following interest rates for each type of loan: Personal (15%), Car (14%), Home (13%), Farm(12%), Commercial (11%). The risk management unit of the bank has identified the following loan risk for each type of loan based on historical records in the area: Personal (12%), Car (8%), Home (5%), Farm (4%), and Commercial (3%). The company in order to limit the exposure to bad loans, the company has set up a limit of 5% on the ratio of the bad loans to all loans provided by the bank. In addition, the upper management has set the following additional constraints: 1) Allocate at least 40% of the loan budget to fund the Farmers and Commercial Businesses, 2) The home loans must be at least 60% of the Personal, Car and Home loans.

Set up the problem as an LP:

Step 1: Define the variables:

Step 2: Define the Objective Function (Not straight forward – needs some thinking)

Step 3: Define the Constraints

LP formulation:

Reference no: EM132297271

Questions Cloud

Write null and non-directional alternative hypotheses : EPID1000 Assignment - Write null and non-directional alternative hypotheses that can be tested with an Independent Samples t test

Explain the consensus of the current supreme court : Explain the consensus of the current Supreme Court, and evaluate how that political leaning will shape pending U.S. Supreme Court issues.

Analyze a criminal case opinion : Analyze a criminal case opinion issued by the U.S. Supreme Court, 2005 or later; explain the issue(s) in the case, the holding of the case.

Examine constitutional protections for defendants : For this assignment, you will examine constitutional protections for defendants prior to trial by providing a detailed analysis of the criminal justice process.

Define the constraints and variables : The upper management of a bank has set the following bank loan policy for the next year. Define the variables. Define the Constraints.

Brief summary of the capabilities of a drone including costs : Brief summary of the capabilities of a drone including costs. Discuss the legal implications including if drones are treated any different that helicopters.

Analyse and critically evaluate software requirements : Analyse and critically evaluate software requirements and proposed solutions - Apply complex decision making to select appropriate testing techniques

Marketing research differ from chinese consumer research : How does "Western" marketing research differ from Chinese consumer research?

How will you use estimation for the project : What is project estimation? How will you use estimation for the project you envisioned in question 1? Provide a description and example of the following.

User Account

All Pages