Ooredoo 4G 12:46 PM mybb.qu.edu.qa Table 6.2 Problem A global investment company

Question

Ooredoo 4G 12:46 PM mybb.qu.edu.qa Table 6.2 Problem A global investment company would like to make an investment on several Oil and Gas Companies in the United States. Total annual expected return (in thousands) and cost for block of shares (investment costs in thousands) are given in Table 1. Table 1. Company name, expected annual return and cost for block of shares COST FOR BLOCK OF SHARES NAME ANNUAL RETURN Trans-Texas Ol (Texas) British Petro (Foreign) Dutch Shell (Foreign) Houston Driling (Texas Lone Star Petro (Texas) San Dieago Oil (Calfornia) Califomia Petro (Califomia) s 80 $ 90 $120 $110 S 40 s 75 $ 480 S 540 $ 680 $1,000 s 700 S 510 S 900 Constraints 1. Total maximum investment is limited to 3,000$ The investor should invest in at least two Texas companies (Trans-Texas, Houston Drilling and Lone Star Petro) 2. 3. The investor should invest in only one California company 4. The investor should invest in maximum one foreign 5. The binary investment value of British Petro should be less 6. All decision variables should have binary values, O or 1. (San Diego Oil and California Petro) companies (British Petro and Dutch Shell) than the binary investment value of Trans Texas

Explanation / Answer

Solution:-

Lets assume:-

X1 is the Number of times invested in Trans-taxes oil

X2 is the Number of times invested in British Pentro

X3 is the Number of times invested in Dutch Shell

X4 is the Number of times invested in Houston Drilling

X5 is the Number of times invested in Lone star petro

X6 is the Number of times invested in San diago Oil

X7 is the Number of times invested in California petro

Equation:-

Maximized Z = 50 X1 + 80 X2 + 90 X3 + 120 X4 + 110 X5 + 40 X6 + 75 X7

Subject to constraints:-

1. (480 * X1) + (540 * X2) + (680 * X3) + (1,000 * X4) + (700 * X5) + (510 * X6) + (900 * X7)

2. X1 + X4 + X5 > 2

3. X6 + X7 < 1

4. X2 + X3 < 1

5. X3 < X1

6. X1 , X2 , X3 , X4 , X5 , X6 , X7 >= 0

Please Rate or comment if you have any doubt regarding this solution.

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