Define the decision variables and objective function

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Reference no: EM132236207

A brokerage firm has just been instructed by one of its clients to invest $600,000 of her money. The analysts at the brokerage firm are considering the following options for investment:

Projected Rate

Investment Option of Return (%)

Municipal bonds 2.4

Company A stocks 8.0

Company B stocks 10.2

Company C stocks 9.5

The client has specified the following guidelines:

- Municipal bonds should constitute at least 30% of the money invested.

- At least 50% of the funds available should be placed in a combination of A, B, and C stocks.

- No more than 60% of the amount invested in municipal bonds should be invested in stock B.

- All money must be invested.

The client’s goal is to maximize total projected return on investments.

Formulate a linear programming model for this investment problem.

(a) Define the decision variables.

(b) Determine the objective function. What does it represent?

Note: Do NOT solve the problem after formulating.

Reference no: EM132236207

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