Optimization Lab Assignment

QNT$2020$ Summer $2024$

Maureen Pope is the CFO for the Alva Electric Company, a major public utility in the

Midwest. The company has scheduled the construction of new hydroelectric plant $5,10,$

and $20$ years from now to meet the needs of the growing population in the region served by

the company. To cover the construction costs, Maureen needs to invest some of the

company's money now to meet the future cash flow needs. Maureen may purchase only $3$

kinds of financial assets, each which costs $$1$ million per unit. Fractional units maybe be

purchased. The assets produce income $5,10,$ and $20$ years from now, and that income is

needed to cover minimum cash flow requirements in those years, as shown in the following

table:

Maureen wishes to determine the mix of investments in these assets that will cover the

cash flow requirements while minimizing the total amount invested.

a$.$ Formulate the algebraic model for this problem.

b$.$ Develop the spreadsheet solution for this problem.

c$.$ Use the spreadsheet to check the possibility of purchasing $100$ units of Asset $1,100$

units of Asset $2,$ and $200$ units of Asset $3.$ How much cash flow would this mix of

investment generate $5,10,$ and $20$ years from now. What would be the total amount

invested?

Submit your solution and answers to the above questions to Brightspace assignment

folder "Lab Optimization$$ by end of day July $12.$