Linear Programming And Sensitivity Analysis

Assignment Help Operation Management

Reference no: EM132856143

Financial - Investment Decision

PyraMax Bank has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 7% for home loans, 12% for personal loans, and 9% for automobile loans.

The bank's planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans.

What is the amount of funds that Pyramax Bank should allocate to each type of loan in order to maximize the total annual return for the new funds?

Let:

H = be the amount allocated to home loans

P = be the amount allocated to personal loans

A = be the amount allocated to automobile loans

Question 1. Write the decision variables.

Question 2. Write the objective function using the decision variables (what does Pyramax Bank want to maximize or minimize in this problem)?

Question 3. Write the constraints (limitations) using the decision variables.

Question 4. Combine the objective function and constraints to write a complete LP model for Pyramax Bank to solve their problem.

Attachment:- Investment Decision.rar

Reference no: EM132856143

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