Managerial Problem Solving: Home-Work

Full Marks: 20
Instructions: Use Excel to do all the problems. Do each problem on a separate worksheet. Save the file with your firstname_lastname.xlsx. For example if your name is Amit Khanna the filename should be amit_khanna.xlsx. After you are done email me your Excel solution file. My email id is preetam.basu@gmail.com. The deadline for submission of this home-work is Oct 28th, 2010 at 10 p.m. Late submissions won’t be accepted. (1) Mike, a certified financial planner is planning to invest $250,000 for a client. The money may be invested in stocks, bonds or a mutual fund in real estate. The expected return on investment is 13% for stocks, 8% for bonds and 10% for real estate. There are certain goals that the client wants to meet: (a) at least 10% expected return on the entire investment (b) at least 30% of the money should be invested in bonds (c) the amount of money invested in stocks should not exceed 20% of the money invested in bonds and real estate combined There is also one absolute restriction that under no circumstances should more than $150,000 be invested in any one area. (i) Formulate the above as a goal program assuming all the goals are equally important. How much money should be put in each of the investment options? What is the total return? (ii) Formulate the above as a goal program assuming the first goal is most important whereas the second and third goals are equally of secondary importance. How much money should be put in each of the investment options? What is the total return? (10 points) (2) The national sales manager for Regent Office Supplies needs to determine the best location for the next national sales meeting. Three locations have been proposed: Pune, Lucknow and Hyderabad. One criteria considered important in the decision is the desirability of the location in terms of restaurants and entertainment. The manager made the following judgments with regard to this criterion: Hyderabad is very strongly more preferred than Pune Hyderabad is moderately more preferred than Lucknow Lucknow is moderately to strongly more preferred than Pune (i) Set up the pair-wise comparison matrix for this problem using the numerical rating given in the slides (3 points) (ii) Determine the score for each location based on the above criterion (3 points) (iii) Comment on the consistency of the pair-wise comparison matrix (4 points)

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