Question 6 (30 points)

A stockbroker has advised his client as shown in the following table.

The client agrees to this list but provides several conditions:

(1) No more than $3,000,000 can be invested,

(2) the money is to be spread among at least five investments,

(3) no more than one type of bond can be purchased,

(4) at least two utility stocks must be purchased, and

(5) at least two regular stocks must be purchased.

Formulate this as a 01 IP problem to maximize expected return.

+++++PLEAESE CORRECT ERRORS+++++

problem needs to be solve using excel solver and the following template.

QUESTIONS 6
	T	B	D	H	L	S	C	C
	x1	x2	x3	x4	x5	x6	x7	x8
Invest? (1 = Yes, 0 = No)	0	0	0	0	0	0	0	0
Exp annual return ('000)	$35	$100	$30	$65	$45	$20	$90	$50	$0
Constraints:
Investment limit	400	1000	350	700	490	270	800	500	0		3000
NO MORE THAN I BOND	1	1	1	1	1	1	1	1	0		5
AT LEAST TWO UTILITY	1	1							0		1
AT LEAST TWO REGULAR			1	1	1				0	>=	1
AT LEAST FIVE TOTAL						1	1	1	0	=	2
									LHS	Sign	RHS

\begin{tabular}{lll} \hline Investment & Cost (thousands) & ExpectedReturn(thousands) \\ \hline Andover municipal bonds & $400 & $35 \\ Hamilton city bonds & $1,000 & $100 \\ East Power \& Light Co. & $350 & $30 \\ Nebraska Electric Service & $700 & $65 \\ Southern Gas and Electric & $490 & $45 \\ Manuel Products Co. & $270 & $20 \\ Builders Paint Co. & $800 & $50 \\ Rest Easy Hotels Co. & $500 & $50 \\ \hline \end{tabular} Set Objective: To: Max Min Value Of: By Changing Variable Cells: $B$5:$1$5 Subject to the Constraints: $B$5:$C$5=5$D$5:$F$5>=2$G$5:$1$5>=2 Make Unconstrained Variables Non-Negative Select a Solving Method: Solving Method Select the GRG Nonlinear engine for Solver Problems that are smooth nonlinear. Select the LP Simplex engine for linear Solver Problems, and select the Evolutionary engine for Solver problems that are non-smooth