QUESTION 1: Graphical Method (25 points) The RBC (Royal Bank of Canada) uses online banking to...

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QUESTION 1: Graphical Method (25 points) The RBC (Royal Bank of Canada) uses online banking to market two new banking products. The first product is a home risk insurance that allows buyers to default for up to 6 months on their mortgage payments. The second is a guaranteed mortgage fund that buyers may purchase to leverage their funds without increasing their debt loads. The RBC expects to make profit contributions of $20 per unit on the home risk insurance instrument, and $8 per unit on the guaranteed mortgage fund. The bank has a policy that at least 50% of total sales of the two products are home risk insurance instruments. The bank is now determining sales quotas for its online offerings to maximize total expected contribution to profits based on the product resource requirements, as follows: Resource Requirements per Product Offering (Hours per Unit) Resource Availability (Hours) 4,800 2,000 1,800 Bank Department Legal Data Management Policy Claims subject to, Home Risk Insurance (HRI) 6 1 3 Guaranteed Mortgage (GM) 4 2 ( A correct formulation for this problem is provided below: Let HRI and GM denote the number of units of Home Risk Insurance instruments and Guaranteed Mortgage units to sell online, respectively. MAX Z = 20 HRI 8 GM 1) Legal Hours 2) Data Mgt Hours 3) Policy Claims 3 HRI 4) Ratio Policy Limits 0.5 HRI-0.5 GM = 0 5) Non-negativity 6 HRI + 4 GM 1 HRI + 2 GM ≤ 4,800 hrs ≤ 2,000 hrs S 1,800 hrs HRI, GM ≥ 0 a) Graph the constraint lines and mark them clearly with the numbers (1), (2), (3) and (4) to indicate which line corresponds to which constraint. Darken the feasible region. (12 points) a) Graph the constraint lines and mark them clearly with the numbers (1), (2), (3) and (4) to indicate which line corresponds to which constraint. Darken the feasible region. (12 points) (b) Determine the optimal solution that will maximize the total expected contribution to profits. Report the solution in a managerial statement (i.e. describe verbally the optimal solution and its profit). Provide all necessary calculations to justify your answers. (7 points). (c) Which constraint(s) is (are) redundant? (3 points) (b) Determine the optimal solution that will maximize the total expected contribution to profits. Report the solution in a managerial statement (i.e. describe verbally the optimal solution and its profit). Provide all necessary calculations to justify your answers. (7 points). (c) Which constraint(s) is (are) redundant? (3 points) (d) Will there be excess capacity in the Data Management resource? Justify. (3 points). QUESTION 1: Graphical Method (25 points) The RBC (Royal Bank of Canada) uses online banking to market two new banking products. The first product is a home risk insurance that allows buyers to default for up to 6 months on their mortgage payments. The second is a guaranteed mortgage fund that buyers may purchase to leverage their funds without increasing their debt loads. The RBC expects to make profit contributions of $20 per unit on the home risk insurance instrument, and $8 per unit on the guaranteed mortgage fund. The bank has a policy that at least 50% of total sales of the two products are home risk insurance instruments. The bank is now determining sales quotas for its online offerings to maximize total expected contribution to profits based on the product resource requirements, as follows: Resource Requirements per Product Offering (Hours per Unit) Resource Availability (Hours) 4,800 2,000 1,800 Bank Department Legal Data Management Policy Claims subject to, Home Risk Insurance (HRI) 6 1 3 Guaranteed Mortgage (GM) 4 2 ( A correct formulation for this problem is provided below: Let HRI and GM denote the number of units of Home Risk Insurance instruments and Guaranteed Mortgage units to sell online, respectively. MAX Z = 20 HRI 8 GM 1) Legal Hours 2) Data Mgt Hours 3) Policy Claims 3 HRI 4) Ratio Policy Limits 0.5 HRI-0.5 GM = 0 5) Non-negativity 6 HRI + 4 GM 1 HRI + 2 GM ≤ 4,800 hrs ≤ 2,000 hrs S 1,800 hrs HRI, GM ≥ 0 a) Graph the constraint lines and mark them clearly with the numbers (1), (2), (3) and (4) to indicate which line corresponds to which constraint. Darken the feasible region. (12 points) a) Graph the constraint lines and mark them clearly with the numbers (1), (2), (3) and (4) to indicate which line corresponds to which constraint. Darken the feasible region. (12 points) (b) Determine the optimal solution that will maximize the total expected contribution to profits. Report the solution in a managerial statement (i.e. describe verbally the optimal solution and its profit). Provide all necessary calculations to justify your answers. (7 points). (c) Which constraint(s) is (are) redundant? (3 points) (b) Determine the optimal solution that will maximize the total expected contribution to profits. Report the solution in a managerial statement (i.e. describe verbally the optimal solution and its profit). Provide all necessary calculations to justify your answers. (7 points). (c) Which constraint(s) is (are) redundant? (3 points) (d) Will there be excess capacity in the Data Management resource? Justify. (3 points).

Answer rating: 100% (QA)

A Graph on pic below Variable HRI is plotted along xaxis and GM along ya... View the full answer