Formulate a linear programming model

Reference no: EM13298710

George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 6% for the bond fund and 10% for the stock fund. Whatever portion of the inheritance he finally decides to commit to the trust fund, he wants to invest at least 30% of that amount in the bond fund. In addition, he wants to select a mix that will enable him to obtain a total return of at least 7.5%.

a- Formulate a linear programming model that can be used to determine the percentage that should be allocated to each of the possible investment alternatives.

b- Find the optimal solution using the graphical solution procedure.

Reference no: EM13298710

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