How much would the return for us oil have to increase

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Reference no: EM13616325

Max s.t.

3U + 5H Maximize total annual return

25U + 50H < 80000 Funds Available

0.50U + 0.25D < 700 ( sign is sammer or equal to) Risk Maximum

1U < 1000 U.S Oil Maximum

U, H > 0 ( bigger or equal to)

The computer solution of this problem is shown in Figure 3.14. (PICTURE)

a. What is the optimal solution, and what is the value of the total annual return?

b. Which constraints are binding? What is your interpretation of these constraints in terms of the problem?

c. What are the dual values for the constraints? Interpret each.

d. Would it be beneficial to increase the maximum amount invested in U.S. Oil? Why or why not?

e. How much would the return for U.S. Oil have to increase before it would be beneficial to increase the investment in this stock?

f. How much would the return for Huber Steel have to decrease before it would be beneficial to reduce the investment in this stock?

g. How much would the total annual return be reduced if the U.S. Oil maximum were reduced to 900 shares?

Reference no: EM13616325

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