Question: Please graph clearly! Problem #2 (problem #30 in chapter 2) A financial advisor at Diehl Investments identified two companies that are likely candidates for a

Please graph clearly! Problem #2 (problem #30 in

Please graph clearly!

Problem #2 (problem #30 in chapter 2) A financial advisor at Diehl Investments identified two companies that are likely candidates for a takeover in the near future. Eastern Cable is a leading manufacturer of flexible cable systems used in the construction industry, and ComSwitch is a new firm specializing in digital switching systems. Eastern Cable is currently trading for $40 per share, and ComSwitch is currently trading for $25 per share. If the takeovers occur, the financial advisor estimates that the price of Eastern Cable will go to $55 per share and ComSwitch will go to $43 per share. At this point in time, the financial advisor has identified Com Switch as the higher risk alternative. Assume that a client indicated a willingness to invest a maximum of $50,000 in the two companies. The client wants to invest at least $15,000 in Eastern Cable and at least $10,000 in ComSwitch. Because of the higher risk associated with ComSwitch, the financial advisor has recommended that at most $25,000 should be invested in ComSwitch (a) Formulate a linear programming (LP) model that can be used to determine the number of shares of Eastern Cable and the number of shares of Com Switch that will meet the investment constraints and maximize the total return for the investment. (b) Solve the problem graphically (clearly show the feasible region and the profit line). i. What is the optimal solution (i.e. how many shares of each company should client invest in and what is the resulting profit?) Page 1 OIM 310 HW2 LP Models: Solving graphically & with Excel ii. Briefly explain how you determined the optimal solution. iii. Which constraints are binding and which are non-binding? Explain why and what it means in terms of use of resources. (c) Solve the LP with the Excel Solver and verify your answers to questions in part (b)

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