Linear and Integer Programming
Download the Excel file titled Exercise 3 for this assignment. The file contains several tabs with the data required for the assignment.
Problem 1 (10 points)
An agriculture firm owns 2,000 acres of farmland. They are trying to determine the amount of land to allocate to 4 separate crops with the following characteristics so as to maximize profit.
Labor Required per Acre
Profit per Acre
The company has a total of 4,000 labor hours per month to allocate to the farms.
Problem 2 (10 points)
A money manager for a university endowment has received a $10 million donation to invest. The intent is to establish a cash flow stream for the next 25 years. The goal is to have an annual payout that begins at $50,000 and grows by 3% per year. The manager has identified a list of 50 different bonds to invest in. The manager’s goal is to determine which bonds to purchase now so as to maximize the total discounted return while guaranteeing the bond’s pay out the required annual funds. The manger has specified a limit of 2,500 units of any individual bond.
The data on tab 3 lists the 50 bonds available for purchase annual payout for each of the next 25 years. The data includes the payout each year based on the bond’s coupon and maturity date. The investment column contains a place to identify the number of bonds purchased of each type.
First, complete the model.
Now specify the optimization model using Analytic Solver.
Now solve the model.
Problem 3 (5 points extra credit)
In this problem we will further investigate the Bond Investment problem from problem 3 by performing a parameter analysis.
First, we will look at how decreasing risk through diversification impacts the total return.
We will do this by evaluating different settings on the Max per Bond setting.
Now we will look at how smoothing out the cash flow effects the total return.
Consider this analysis and
Earn back money you have spent on downloaded sample
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