Heinlein and Krampf Brokerage

Invest $250,000 result of sales

•Municipal bonds should constitute at leat 20% of the Inventesment

•At least 40% of the funds should be placed in a combination of electronic firms, aerospace firms, and drug manufactures.
•No more than 50% of the amount invested in municipal bonds should be placed in a high-risk,high-yield nursing home stock 

Investment Projected Rate

Of Rate of Return
x1 Los Angeles municipal bonds 5.3
x2 Thompson Electronics, Inc. 5.8
x3 United Aerospace Corp. 4.9
x4 Palmer Drugs. 8.4
x5 Happy Days Nursing Homes 11.8

Decision variables
X1= dollars invested in los Angeles muncipald bonds
X2= dollars invested in Thompson Electronics
X3= dollars invested in United Aerospace Corp.
X4= dollars invested in Palmer Drugs
X5= dollars invested in Happy days Nursing Homes

Objective function
Maxime the retunr of investment:
0.053X1 +0.058X2 +0.049X3 + 0.084X4 +0.118X5 (maximize return on investment)
Subject to:
Constrain 1 X1 + X2 + X3 + X4 + X5 < 250,000 total money
Constrain 2 0.8X1 - 0.2X2 -0.2X3 - 0.2X4 -0.2X5 > 0 bond restrictions
Constrain 3 -0.4X1+0.6X2+0.6X3+0.6X4-0.4X5 > 0 electronics, aero s, drugs
Constrain 4 -0.5X1 + X5 < 0
X1,X2,X3,X4,X5 > 0 non negative constrains

Variables X1 X2 X3 X4 X5
Solution 50000 0 200000 0 0
[Link]. Return 0.053 0.058 0.049 0.084 0.118 12,450
Constrains LHS RHS
Selling land in Ohio 1 1 1 1 1 250,000 < 250,000
Municipal bonds 20% 0.8 -0.2 -0.2 -0.2 -0.2 (0) > 0.00
Electronic + Drug + Aero Space
must be at least 40 % -0.4 0.6 0.6 0.6 -0.4 100,000 > 0

Nursing home and % of bonds -0.5 0 0 0 1 (25,000) < 0

Invest
50,000 in los Angeles municipal bonds
200,000 on United Aerospace Corp.

Max Return
12,450