Reference no: EM133337031

Assignment:

The scenario to be discussed:

Energy Management Corporation (EMC) must decide its level of capital investment in the six energy ventures described below. EMC wishes to maximize its total expected return on a maximum total investment of $10,000,000. At least half of this must be in the United States, including Alaska. No more than 20% can be in sour crude and coal investments. In addition, allocations must at least meet the minimums specified in column three below. For example, investment in Wyoming Coal must be at least $1,000,000.

Venture (Location)	Expected Return	Minimum Investment	Primary Product
Wyoming Coal	75%	$1,000,000	Coal
Colorado Shale	62%	$400,000	Sour crude
Prudhoe Bay Alaska	125%	$1,000,000	Sweet crude
Mexico	135%	None	Sweet crude
Alberta Tar Sands	80%	None	Sour crude
Virginia Coal	85%	$300,000	Coal

1. Formulate the linear programming model. Clearly state your decision variables, objective function and all constraints. Use fractions rather than percentages in your formulation of the objective function.

2. Solve the model using Microsoft Excel Solver. Attach the Microsoft Excel file as part of your submission.

3. Interpret the results from Microsoft Excel Solver, including the Sensitivity Report. What aspects of the computer-generated strategy are you in agreement with (based on a consideration of the sensitivity data)? What aspects of it would you disagree with? Why?