Susan Wong wants to develop a linear programming model for her budget. The objective is to maximize her short-term investments during the year so she can take the money and reinvest at the end of the year in a longer-term investment program.
Susan has $3000 in her bank account at the beginning of this year. Her after-taxes-and-benefits salary is $29400 per year which she receives in 12 equal monthly paychecks ($2450/month) at the end of each month. Susan has computed her expected monthly liabilities for this year, as shown in the following table.
|
Month
|
Bills ($)
|
Month
|
Bills ($)
|
|
January
|
2860
|
July
|
3050
|
|
February
|
2750
|
August
|
2300
|
|
March
|
2550
|
September
|
1975
|
|
April
|
2120
|
October
|
1670
|
|
May
|
1205
|
November
|
2710
|
|
June
|
1600
|
December
|
2980
|
Susan has decided that she will invest any money she doesn't use to meet her liability each month in either 1-month, 3-month or 7-month short-term investment vehicles. The yield on a 1-month investment is 6% per year nominal (0.5%/month). The yield on a 3-month investment is 8% per year nominal (equivalent to 2% for 3 months). On a 7-month investment, the yield is 12% per year nominal.