The ABC Company received a $60 million order to be delivered in 6 months. The production plan calls for cash layout for the next 6 months as given in the following: B16-G16 Currently, ABC has $1,000,000 on hand. It also has secured LC (line of credit) for the 6 months ahead. The terms of the LC are given in B13-B15. For the Short term (or monthly) Loan, ABC gets the fund at the beginning of the month but has to pay back principal and interest at the beginning of next month. For the Medium-term (or 3 months) Loan, ABC will also receive the fund at the beginning of the month but has to pay it back at the beginning of the fourth month. For the Long term (or 6 months) Loan, ABC will get the fund at the beginning of the first month and will have to pay it back at the beginning of the seventh month when it will receive the lump sum payment of the order for $60 million. There is also a loan processing fee of $5,000 for every single loan initiated, whether it is short term, medium term, or long term, and these fees will all be collected at the end of 6 months. Formulate the problem to maximize profit for ABC. Solve in excel using solver

Starting cash (in 1,000s)	1000
Long term (6-month loan)	9% for 6 months
medium-term (3-month loan)	5% for 3 months
Short term (1 month loan)	2% per month
Operating Cash Needed/Month (in 1000s)	3500	4200	5200	3900
Revenue at end of 6 months (in 1000s)	60000

Answer rating: 100% (QA)

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