The client can invest up to 100000 the following conditions


Question: Porter Investments needs to develop an investment portfolio from the following list of possible investments:

Investments Cost Expected
Return
A 15,000 1,700
B 17,000 1,850
C 8,500 1,400
D 10,000 1,500
E 13,500 1,750
F 13,000 1,650
G 9,000 1,500
H 9,500 1,700

The client can invest up to $100,000. The following conditions should be met: (1) If investment C is chosen, then investment D must also be part of the portfolio, (2) at least four investments should be chosen, (3) of investment A and B, exactly one of these investments should be included, (4) of investments F,G,H - exactly two of these should be included in the portfolio. What investments should be included in the portfolio? Remember the investments is either included or not - it cannot be partially included and multiples of the investment cannot be included. Formulate this as a binary linear program and solve in Excel. The objective should be to maximize total return.

a) How many decision variables does this problem have?

b) Not counting the non-negativity constraint - how many constraints does this problem have?

c) What is the total return for the portfolio?

d) Which investments should be included in the portfolio?

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Finance Basics: The client can invest up to 100000 the following conditions
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