7 Investment Advisors Inc is a brokerage firm that manages s

7. Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for a num- ber of clients. A particular portfolio consists of U shares of U.S. Oil and H shares of Huber Steel. The annual return for U.S. Oil is $3 per share and the annual return for FIGURE 8.14 SENSITIVITY REPORT FOR THE KELSON SPORTING EQUIPMENT PROBLEM Variable Cells Model Variable Final Reduced Objective Allowable Allowable Value Name Gloves Standard Gloves Deluxe 500.000 150.000 Cost 0.000 0.000 Coefficient 5.000 8.000 Increase 7.000 2.000 Decrease 1.000 4.667 Constraints Constraint Number Final Value Shadow Constraint Allowable Allowable Increase Decrease 1E+30 175.000 Price 0.000 3.000 28.000 R.H. Side 900.000 300.000 100.000 Name Cutting and Dyeing Hours Used Finishing Hours Used Packaging and Shipping Hours Used 725.000 0 300.000 100.000 35.000 25.000

Solution

The constraints are total funds available and maximum risk.

Also U should be <=1000

Let us graph these first

The corner points for the feasible region are (1400,0), (582,1636) and (0,2000)

Annual return for (1000,800) = 7000

                         (582, 1636) = 291+409 = 700

                         (0,2000) = 10000

Hence max return only for (0,2000) hence this is the optimal solution and annual return = 10000

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b) Constrains are the funds available, and risk factor.

c) Not advisable as US gives minimum return and even without US oil profit is maximum