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BA3623: Management Science

Fall 2016: Assignment 2

Submission Due: November 14, 2016, 3Pm

Dr. Amin, Oland Hall 220

Instructions:

1. Use Excel to answer your assignment. Solve each part (A, B, and C) in a separate sheet.

2. Explain all the details, define decision variables, objective function, constraints, etc.

3. Name your Excel file as "ID_Assign2" where ID is your student ID.

4. Please upload your answer file no later than Monday, November 14, 2016, 3pm.

Assignment 2: Assume you have $X000 (X thousand dollars) to invest over the next

seven years. At the beginning of each year you can invest money in one or three-year

time deposits. The bank pays 1 percent interest on one-year deposits and 4 percent

(total) on three-year time deposits. In addition, Royal Bank of Canada will offer two-

year certificates starting at the beginning of the third year. This investment in RBC will

return 2.75 percent (total). If you invest your money that is available every year,

formulate a linear programming to maximize your total cash on hand at the end of the

7th year.

A: Suppose X is the sum of your student ID digits. Moreover, assume that you can

invest at the beginning of each year any value in the available investment options.

Define decision variables, objective function, and constraints for your linear

programming model. (6 marks)

B: Solve your investment LP model using Excel Solver and interpret your investment

plan. (3 marks)

C: Assume the two-year RBC deposit starts at the beginning of the fifth year. What

would be the corresponding change in your model formulated in Part A? (1 mark)