Develop an lp model that represents the problem

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TradeCo wants to invest at most $10,000 in 2021. Two investment options are proposed: STK and BD, with annual yields of 20% and 10% respectively. Based on market research, TradeCo wishes to limit the amount invested in STK to no more than 60% of the total investment. How should TradeCo invest to generate the highest annual yield?

-Develop an LP model that represents the problem. Please clearly state decision variables, objective and constraints. You do not need to solve it.

-Suppose that TradeCo imposes one more restriction: investment in BD should be at least α times the investment in STK where α is a non-negative constant. Find the optimal solution to the problem and discuss how the value of α would affect TradeCo's best investment decision and annual yield. . [Hint: use the graphical method and solve for the optimal solution in terms of α.]

Reference no: EM132893387

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