Question: PROBLEM 2: Recall the model developed in the class for the Refinery Blending Problem (a) Use SOLVER to obtain the solution. What is the optimum

PROBLEM 2: Recall the model developed in the class for the Refinery Blending Problem (a) Use SOLVER to obtain the solution. What is the optimum solution and the cost? (b) If the refinery just realized that it has only 500,000 gallons of crude oil 1. Can you still use the refinery plan found in (a)? If not, modify your model to incorporate this constraint and re-solve using SOLVER Let: B1= Amount ($) invested in Bond-1 B2= Amount ($) invested in Bond-2 B3= Amount ($) invested in Bond-3 B4= Amount ($) invested in Bond 4 Objective: Maximize Expected total return for the first year Maximize 0.13B1+0.08B2+0.12B3+0.14B4 Constraints: 1. Budget : Total investment should be $1000000 B1+B2+B3+B4=1000000 2. Worst Case Return should exceed 0.08 10000000.06Dt+0.08B2+0.10g3+0.09B40.08 Simplifying this constraint, we get: 0.06.81+0.08B2+0.1083+0.09B40.08+100000 3. Average duration should not exceed 6 1000000381+482+783+954=6 simplifying this constraint, we get: 381+482+783+934641000000 4. Diversity constraint: Investment in each bond cannot exceed 40% of Total Investment. Bond-1: B 1400000 Likewise: Bond-2: B2 400000 Bond-3: B3 400000 Bond-4: B4400000 3. Logical Constraints: B1, B2, B3, B4 30 Putting everything together, the model is: Maximize0.13B1+0.08B2+0.12B3+0.14B4Constraints:1000000 PROBLEM 2: Recall the model developed in the class for the Refinery Blending Problem (a) Use SOLVER to obtain the solution. What is the optimum solution and the cost? (b) If the refinery just realized that it has only 500,000 gallons of crude oil 1. Can you still use the refinery plan found in (a)? If not, modify your model to incorporate this constraint and re-solve using SOLVER Let: B1= Amount ($) invested in Bond-1 B2= Amount ($) invested in Bond-2 B3= Amount ($) invested in Bond-3 B4= Amount ($) invested in Bond 4 Objective: Maximize Expected total return for the first year Maximize 0.13B1+0.08B2+0.12B3+0.14B4 Constraints: 1. Budget : Total investment should be $1000000 B1+B2+B3+B4=1000000 2. Worst Case Return should exceed 0.08 10000000.06Dt+0.08B2+0.10g3+0.09B40.08 Simplifying this constraint, we get: 0.06.81+0.08B2+0.1083+0.09B40.08+100000 3. Average duration should not exceed 6 1000000381+482+783+954=6 simplifying this constraint, we get: 381+482+783+934641000000 4. Diversity constraint: Investment in each bond cannot exceed 40% of Total Investment. Bond-1: B 1400000 Likewise: Bond-2: B2 400000 Bond-3: B3 400000 Bond-4: B4400000 3. Logical Constraints: B1, B2, B3, B4 30 Putting everything together, the model is: Maximize0.13B1+0.08B2+0.12B3+0.14B4Constraints:1000000

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