Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7.7, Problem 41P
Summary Introduction
To develop: A portfolio that achieves an expected monthly return of at least 1% and also minimizes the portfolio variance and afterward use the solver table to sweep out the efficient frontier.
Non-linear programming (NLP):
Non-linear programming (NLP) is used in complex optimization problems where the objectives or constraints or sometimes both are non-linear functions of the decision variables. A model can be termed as non-linear for more than one reason.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
CA Corporate has an available funds of $200,000 is considering for new investment
opportunities. The investment portfolio of a variety of stocks has relevant financial data as
follows:
Stocks
A
B
с
D
Price per share ($)
100
50
80
40
Annual rate of return
0.12
0.08
0.06
0.10
0.10
0.07 0.05 0.08
Risk measure per dollar invested
(Higher values indicate greater risk)
The risk measure provided by the firm's top financial advisor, indicates the relative
uncertainty associated with the stock regarding the realization of its projected annual rate of
return. Top management of CA Corporate has stipulated the following investment guidelines:
1. The annual rate of return for the portfolio must be at least 9%.
2. No one stock can count for more than 50% of the total dollar investment.
For this overall situation, develop a linear programming model to yield an investment
portfolio which minimizes total risk. What is the total risk and the total return, if the amount
to be invested in stocks A, C and…
Mr. Johnnie B. Good has a furniture business which he operates as a sole proprietor. The business has been doing well for several years and now he wants to finance the expansion of his business by way of a loan and he is thinking of approaching BCN Bank accordingly. He is also planning to buy a great deal of raw material on credit from Miller’s Hardware in support of the business expansion. Mr. Good in looking at the potential risks to his personal assets and in an effort to safeguard himself from losing his personal assets if the business failed and was not able to repay the loan or pay for the material he got on credit, filed the relevant documents with the companies office and incorporated a private company, Good Furniture Ltd, with him as the sole shareholder and director and then went ahead and obtained a loan in the company’s name from the bank and bought the raw material on credit on behalf of the company. The bank in providing the loan ensured that Mr. Good signed a personal…
Shakeia Duncan wants to know what home price she can afford. Her annual gross income is $46,200. She owes $840 per month on other debts and expects her property taxes and homeowner's insurance to cost $160 per month. She knows she can get an 10.50 percent, 30-year mortgage so her mortgage payment factor is 9.15. She expects to make a 15 percent down payment. What is Shakeia's affordable home purchase price?
Chapter 7 Solutions
Practical Management Science
Ch. 7.3 - Prob. 1PCh. 7.3 - Prob. 2PCh. 7.3 - Pricing Decisions at Madison The Madison Company...Ch. 7.3 - Prob. 4PCh. 7.3 - Prob. 5PCh. 7.3 - Prob. 6PCh. 7.3 - Prob. 7PCh. 7.3 - Prob. 8PCh. 7.3 - Prob. 9PCh. 7.3 - Prob. 10P
Ch. 7.3 - Prob. 11PCh. 7.3 - Prob. 12PCh. 7.3 - Prob. 13PCh. 7.3 - PRICING SUITS AT SULLIVANS Sullivans is a retailer...Ch. 7.3 - Prob. 15PCh. 7.4 - Prob. 16PCh. 7.4 - Prob. 17PCh. 7.4 - Prob. 18PCh. 7.4 - Prob. 19PCh. 7.4 - Prob. 20PCh. 7.4 - Prob. 21PCh. 7.4 - Prob. 22PCh. 7.4 - Prob. 23PCh. 7.5 - Prob. 24PCh. 7.5 - Prob. 25PCh. 7.5 - Prob. 26PCh. 7.5 - Prob. 27PCh. 7.6 - Prob. 28PCh. 7.6 - Prob. 29PCh. 7.6 - Prob. 30PCh. 7.6 - Prob. 31PCh. 7.6 - Prob. 32PCh. 7.6 - Prob. 33PCh. 7.6 - The method for rating teams in Example 7.8 is...Ch. 7.7 - Prob. 35PCh. 7.7 - Prob. 36PCh. 7.7 - Prob. 37PCh. 7.7 - The stocks in Example 7.9 are all positively...Ch. 7.7 - Prob. 39PCh. 7.7 - Prob. 40PCh. 7.7 - Prob. 41PCh. 7.7 - Prob. 42PCh. 7.8 - Given the data in the file Stock Beta.xlsx,...Ch. 7.8 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Another way to derive a demand function is to...Ch. 7 - Prob. 48PCh. 7 - If a monopolist produces q units, she can charge...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - A beer company has divided Bloomington into two...Ch. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - You have 50,000 to invest in three stocks. Let Ri...Ch. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Based on Grossman and Hart (1983). A salesperson...Ch. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 1.1CCh. 7 - Prob. 1.2CCh. 7 - Prob. 1.3CCh. 7 - Prob. 1.4C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.arrow_forwardAssume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.arrow_forwardIn Problem 12 of the previous section, suppose that the demand for cars is normally distributed with mean 100 and standard deviation 15. Use @RISK to determine the best order quantityin this case, the one with the largest mean profit. Using the statistics and/or graphs from @RISK, discuss whether this order quantity would be considered best by the car dealer. (The point is that a decision maker can use more than just mean profit in making a decision.)arrow_forward
- When you use a RISKSIMTABLE function for a decision variable, such as the order quantity in the Walton model, explain how this provides a fair comparison across the different values tested.arrow_forwardIf the number of competitors in Example 11.1 doubles, how does the optimal bid change?arrow_forwardExplain in some detail how the PrecisionTree calculations in Figure 6.11 for the Acme problem are exactly the same as those for the hand-drawn decision tree in Figure 6.6. In other words, explain exactly how PrecisionTree gets the monetary values in the colored cells in Figure 6.11. If your answer is negative number, enter "minus" sign. Market EMV Great ( $18 × - $ ) = $ Fair ( $18 × - $ ) = $ Awful ( $18 × - $ ) = $ Total 0.45 × __ $ + 0.35 × ___$ + 0.20 × ___ $ = ___ $arrow_forward
- Choose two publicly traded stocks and fill in their tickers to cells B3 and B4 of FrontSheet. For your chosen stocks, work out the following tasks. 1. On sheet Q1, compute the weekly returns of the chosen stocks over the last 150 weeks (prior to 22nd April 2024). 2. For each stock, plot a histogram of its returns. 3. Estimate the means, variances and the correlation of the two stocks. (If the computed correlation is 1 or -1, please choose a different set of stocks for all questions.) 4. Calculate the value at risk of the returns at confidence level 95% of each stock. 5. Plot the efficient frontier of a portfolio consisting of the two chosen stocks. 6. Suppose that the weekly interest rate is 0.1%. Calculate the Sharpe ratio of this port- folio. 7. How does the Sharpe ratio of such portfolio change if the weekly interest rate decreases? Justify your answer by numerical evidences.arrow_forwardCreate a spreadsheet to calculate your projected total costs, total revenues, and total profits for giving a seminar on cost estimating. Make the following assumptions: You will charge $600 per person for a two-day class. You estimate that 30 people will attend the class, but you want to change this input. Your fixed costs include $500 total to rent a room for both days, setup fees of $400 for registration, and $300 for designing a postcard for advertising. Youwill not include your labor costs for this estimate, but you estimate that you will spend at least 150 hours developing materials, managing the project, and giving the actual class. You would like to know what your time is worth given different scenarios. Youwill order 5,000 postcards, mail 4,000, and distribute the rest to friends and colleagues. Yourvariable costs include the following: $5perperson for registration plus 4 percent of the class fee per person to handle credit card processing; assume that everyone pays…arrow_forwardyou own a furniture store and you are in the process of planning the production of wooden chairs for the next six months. your demand forecast for wooden chairs for the next six months is 150,100,200,300,50,200. you currently stock 50 chairs in stock. one of your customers informed you that they would be returning 50 additional chairs to you and you expect to receive these returns in month 2. you currently employ 10 skilled employees who work entirely making chairs. in the last six months they were able to make 900 chairs working full time. you are considering two alternative production plans: constant workforce level for the next six months and meet all demand on time. adjust your workforce level only once over the next six months after month 0. ( no still backlogging). hiring cost per employee=$1000holding cost monthly per chair=$10 lay off cost per emloyee=$2000payroll cost monthly per employee=$2000 implement each alternative to obtain the least total cost. solve this question with…arrow_forward
- Hello! I need help solving this with the NEWSVENDOR equation/model. I'm stuck :-( Sarah and her fiancé are planning for their wedding. Distribution of the number of guests coming to the party is normal with the mean 100 and the standard deviation 10. They need to determine how many guests to book for food from a caterer. The caterer makes the following charges: $50 for each guest that is booked in advance; $90 for each guest who is not booked in advance but shows up on the wedding day. The caterer does not offer any refund even if some booked guests may not show up. If Sarah and her fiancé book 90 guests in advance with the caterer, what is the probability of stock out? If Sarah and her fiancé book 100 guests in advance with the caterer, what is the expected number of meals to be wasted?arrow_forwardSuppose a grocer is faced with a problem of how many cases of milk to stock to meet this week’s demand. The grocer estimates that 10, 15, 20, or 25 cases will be needed and wants to analyze the situation using a payoff table and decision theory to determine how many cases to stock. Every case of milk costs the grocer $55 and will be sold for $90 (if sold during the week). If there are cases left at the end of the week, they will be sold to a food bank for $30 per case. Fill in the payoff table (Using Excel - calculate the payoff for each combination of cases of milk ordered and cases of milk demanded). Cases demanded 10 15 20 25 Cases stocked 10 15 20 25 B. Assume the probability of demand is determined as in the table below. Demand 10 cases 15 cases 20 cases 25 cases Probability .08 .25 .45 .22 Calculate the Expected…arrow_forwardUnder Fundamental analysis the intrinsic value of the stock is meassured by analysing economic and financial factors. This method analysis the stock's real and fair market value. According to this analysis if the market price of the stock is lower than its fair market value then the stock is deemed to be underpriced, which means the stock price is going to rise in future. On the other hand if the fair market value of the stock is lower than its market price then it is assumed that the future prices of stock are going to decline. BASED ON THE STATEMENT ABOVE PLEASE DRAW THE GRAPH AND EXPLAIN IT ON U.S. SITUATIONarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,