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Bpre (2) - Merged

The document outlines an investment planning problem for maximizing returns over five years using activities A, B, C, and D. It formulates a linear programming model with decision variables, an objective function to maximize total returns, and constraints related to budget and investment opportunities. The investor starts with $60,000 and seeks to determine the best investment strategy.

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Rashmi Singh
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26 views4 pages

Bpre (2) - Merged

The document outlines an investment planning problem for maximizing returns over five years using activities A, B, C, and D. It formulates a linear programming model with decision variables, an objective function to maximize total returns, and constraints related to budget and investment opportunities. The investor starts with $60,000 and seeks to determine the best investment strategy.

Uploaded by

Rashmi Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

G.L. Bajaj Institute of Management &Research.

PGDM Institute
Approved by A.I.C.T.E., Ministry of HRD, Govt. of India
Plot No. 2, Knowledge Park-III, Greater Noida
PGDM /PGDM (GENE RAL) BATCH-2022-24

(Subject Name: Business Process Re-Engineering-BPRE)

Term- V
PGDM Batch 2022-24

Submitted by: Rashmi Kumari Submitted To Mr. Ravi Ranjan


Admission No: PGDM22006
Roll No: GM22003
Question

Investment Planning

•An investor has money-making activities A and B available at the

Beginning to each of the next five years.

•Each dollar invested in A at the beginning of a year returns $1.4two

Years later.

•Each dollar invested in B at the beginning of a year returns $1.7three

Years later.

•In addition, investment opportunities C and D will each be available

Only once in future.

•Each dollar invested in Catthebeginningofyear2returns$1.90at

The end of year 5.

•Each dollar invested in D at the beginning g of year 5 returns $1. 3 at the end of year 5.

• The invest or begins with $60,000 and wishes to know which investment plan maximizes the amount
of money at the end of five years.

•Formulate the problem as a linear program.


Answer-

Investment Planning Linear Program for Assignment

Step 1: Decision Variables

Let's define decision variables to represent the amount invested in each activity:

 A_i: Amount invested in activity A in year i (i = 1, 2, 3, 4, 5)


 B_i: Amount invested in activity B in year i (i = 1, 2, 3, 4)
 C: Amount invested in activity C in year 2
 D: Amount invested in activity D in year 5

Step 2: Objective Function

We want to maximize the total amount of money at the end of year 5. This includes:

 Money earned from investments A and B


 Money earned from investments C and D (if made)
 Initial investment remaining

Therefore, the objective function is:

Maximize 1.4 * (A_1 + A_2 + A_3 + A_4) + 1.7 * (B_2 + B_3 + B_4) + 1.9 * C + 1.3 * D
+ 60000 (A_5 + B_5)

Step 3: Constraints

 Budget constraint: The total amount invested in each year cannot exceed the available
funds:
A_i + B_i <= 60000 (i = 1, 2, 3, 4)
A_5 + B_5 + C + D <= 60000 + 1.4A_4 + 1.7B_4

This accounts for the remaining funds from previous years' investments.

 Non-negativity constraints: The amount invested cannot be negative:


A_i, B_i, C, D >= 0 (i = 1, 2, 3, 4, 5)
 Investment opportunity constraints: Activities C and D can only be invested in
once:
C = 0 or C = 60000
D = 0 or D = 60000

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