Question

In a portfolio problem, X1, X2, and X3 represent the number of shares purchased of stocks 1, 2, and 3, which have selling prices of $15, $47.25, and $110, respectively. The investor has up to $50,000 to invest 98) The stockbroker suggests limiting the investments so that no more than $10,000 is invested in stod 2 or the total number of shares of stocks 2 and 3 does not exceed 350, whichever is more restrictive. How would this be formulated as a linear programming constraint? A) X2 s 10000 B) 10,000 X2 s 350X2 + 350X3 X2 + X3 s 350 C) 47.25X2 s 10,000 D) 47.25X2 10,000 X2+X3 = 350 47.25 X2 + 110X3 350

Answer 1

Ans:

Linear Programming:

Linear programming is a technique that maximizes or minimizes the linear function because of some restrictions made by some of the factors. These restrictions are know as constraints.

How would this be formulated as a linear programming constraint:

Stock 1 = X1

Stock 2 = X2

Stock 3 = X3

The investment is limited so that not more than $10,000 is invested in stock 2. The selling price of stock 2 is 47.25

Therefore, first constraint will be:

47.25X2 <= 10,000

Shares of stock 2 and stock 3 does not exceed 350.

Therefore, second constraint will be:

X2 + X3 <= 350

Two Constraints will be:

Correct option = C) 47.25X2 <= 10,000, X2 +X3 <= 350