Formulate a linear program for ecu

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1.The Employee Credit Union at Directional State University is planning the allocation of funds for the coming year. ECU makes four types of loans and has three additional investment instruments. Each loan/investment has a corresponding risk and liquidity factor (on a scale of 0-100, with 100 being the most risky/liquid). The various revenue-producing instruments are summarized in the table below:

Instrument                    Annual Rate of Return (%)       Risk Factor          Liquidity Factor
Automobile loans                       8                                     50                       0
Furniture loans                          10                                   60                       0
Other secured loans                   11                                   70                       0
Unsecured loans                        14                                   80                       0
Risk-free securities                    5                                     0                         100
Corporate stock fund                 9                                     60                       90
Corporate bond fund                 8                                     50                       80

ECU has $2,000,000 available for investment during the coming year. However, state laws and pesky stakeholders impose certain restrictions on choice of investment instruments. Risk-free securities may not exceed 40% of total funds available for investment. Unsecured loans may not exceed 10% of total funds invested in loans. The funds invested in automobile loans must not be less than the total of funds invested in furniture and other secured loans. The average risk factor may not exceed 60, and the average liquidity factor must be at least 40. Formulate a linear program for ECU.

Reference no: EM131387459

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