Optimization case study Custom Essay

I have done more than 70% of the report.

The writer just has to complete the rest (Red font), which are executive summary, introduction, answeringo What happen to optimal solution
• Same?
• New solution?
o What happen to value of the objective function
• Calculate
• New
and conclusion, WHICH IN THE FILE NAME ‘S3300015’

I WILL ALSO UPLOAD THE QUESTION AND EXCEL FILE IN ORDER TO HAVE MORE DETAIL

ISYS2042 MIS Assignment Two
Optimization Case Study

1 Assignment Specifications

Case Description

Megabucks Financial Services specialises in investment advice. A client has requested the company for advice on her investment portfolio. She has a maximum amount to invest which is 9 followed by the first

5 digits of your student number. For example
• If your student number is 9900244W, the maximum invested is $999,002.
• If your student number is 2110244W, the maximum invested is $921,102
• If your student number is 3020244, the maximum invested is $930,202

The objective is to maximise the total return from the investments in the first year. Possible investments under consideration are as follows:

APH Bonds Beech Systems
Chepstar Dynafox
Excessa FYZ Enterprises

The return on these investments and their investment term will be given to you as follows:

Inestment Return (% per annum) Term
APH Bonds 7.5% 1 year
Beech Systems 11.5% 8 years
Chepstar 10.5% 3 years
Dynafox 8.5% 10 years
Excessa 5.5% 5 years
FYZ Enterprises 8.0% 7 years

If the investment term is 7 years or more, the investment is classified as long term. Investment terms of 3 years or less are short term. Terms between these two limits are medium.

The following restrictions apply:
• A total of not more than $150,000 can be invested in companies where the rate of return is higher than 10% as these are classified as high risk
• At least $100,000 in total must be invested long term
• No individual investment can exceed $250,000
• The total amount of short term investments must exceed $100,000 to cover possible liquidity problems.

The Evaluation Tasks

Formulate the problem above as a linear programming problem and determine the optimised solution to the problem using Excel. Create Answer and Sensitivity reports. Write a short report covering the

following

a) Statement of your linear program problem,

b) Recommended investment strategy, giving the return in dollars for the first year,

c) The implications of a 10% increase or decrease in the individual investment returns (while keeping the returns on the others constant), including the effect on the objective function amount, and

d) The implications of a 10% increase or decrease in the constraint right hand side amounts, including the effect on the value of the objective function.

2. Assignment submission

The assignment needs to be submitted online through the assignment drop box in the Blackboard and you will be required to submit
• A report named by your student ID, and
• An Excel file named by your student ID with all the Excel models for the case.

A penalty of 20% per day may be applied for late submission.

What to submit:
1.the model file name s3300015.xls (already done)

-model formation
-lp model
-answer report
-sensitivity report

2. Report structure

• Cover sheet
• Executive summary (150 words)
o Tell what this report is about
o What include in the report
o What is your conclusion/recommendation
• Introduction (problem description)
• Limit report (LP) model
o Maximise R (return)=a1x1+a2x2+…..a6x6
o Subject: High risk <= 150,000 o Long term >= 100,000
o Individual invest<= 250,000 o Short term invest>= 100,000
o Total invest<=________ o Negativity • Investment strategy • Analysis o What happen to optimal solution ? Same? ? New solution? o What happen to value of the objective function ? Calculate ? New • Recommendation (Link to investment strategy) • Conclusion (250 words)