Use the Sensitivity Report to answer the following questions:
a. What is the optimal total expected interest earned for next year?
b. What is the dollar amount that should be invested in each stock?
c. Which constraints are binding? Which constraints are not binding?
d. Is the solution to the problem unique or are there alternate optimal solutions?
e. Does the optimal solution call for investing the entire $1,000,000?
Formulation:
Max 0.07A + 0.09B + 0.08C + 0.10D + 0.11E
Subject to:
A + B + C + D + E ≤ 1,000,000 (1 )
A + B ≥ 350,000 (2 )
E ≤ 150,000 (3 )
A, B, C, D, E ≥ 0
a. $98,000.
b. A = $0, B = $350,000, C = $0, D = $500,000, and E = $150,000.
c. All three constraints are binding.
d. The solution is unique.
e. Yes
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