Question: k portfolios for a number c. Interpie d. How much will the value of life and shipping time are made available? Investment Advisors, Inc., is

k portfolios for a number c. Interpie d. How much will the value of life and shipping time are made available? Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for an of clients. A particular portfolio consists of U shares of U.S. Oil and H sharee Steel. The annual return for U.S. Oil is $3 per share and the annual return for Huber Steel is $5 per share. U.S. Oil sells for $25 per share and Huber Steel sells for $50 per share The portfolio has $80,000 to be invested. The portfolio risk index (0.50 per share of U.S. Oil and 0.25 per share for Huber Steel) has a maximum of 700. In addition, the portfolio is limited to a maximum of 1000 shares of U.S. Oil. The linear programming formulation that will maximize the total annual return of the portfolio is as follows: Max 3U + 5 Maximize total annual return s.t. 25U + 50H S 80,000 0.50U + 0.25D 5 700 s 1000 U, H20 Funds available Risk maximum U.S. Oil maximum IU Problems FIGURE 3.14 THE SOLUTION FOR THE INVESTMENT ADVISORS PROBLEM Optimal Objective Value - 8400.00000 Variable Value Reduced cost 800.00000 1200.00000 0.00000 0.00000 Constraint Slack/Surplus Dual Value 0.00000 0.00000 200.00000 0.09333 1.33333 0.00000 Variable Objective Coefficient Allowable Increase Allowable Decrease - -- - - - --- 3.00000 5.00000 7.00000 1.00000 0.50000 3.50000 Constraint RHS Value Allowable Increase Allowable Decrease WN 80000.00000 700.00000 1000.00000 60000.00000 75.00000 Infinite 15000.00000 300.00000 200.00000 The computer solution of this problem is shown in Figure 3.14. 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

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