OECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to financeits loan portfolio. Its operations manager is asked to build an LP model to help guide companydecisions as to how to disburse the revolving fund across different loan categories. The operationsmanager garnered the following data on available types of loans based on market research of theindustry:Types of loanPersonalCarInterest rateBad debt ratio0.15.100.200.04HomeSmall and medium enterprises 0.25Commercial0.170.020.150.100.02The Bank's net return is interest rate net of Bad debt. Revenue from interest is gained only from goodloans.The mutual funds Division has allocated $5.0M and is currently looking for investment opportunitiesto invest these funds, The financial analyst suggested that all new investments be made in the oilindustry, steel industry or in government bonds. The analyst identified five investment opportunities:two from the oil industry, two from the steel and government bonds.Types of opportunitiesАВС oilXZY oilMona steelReturns0.0950.0850.04TNT steel0.05Government Bonds0.015Formulate a LP model for the OECS bank that will maximize net returns from the loans division anda separate model for the Mutual Funds Division including ratio constraints.1. Home loans must equal at least 50% of the personal, car and homes loans.2. The bank also has a stated policy of not allowing the overall ratio of bad debts on allloans to exceed 5 %3. Generate the non-negative constraint

formulate a L.P model for the OECS bank that will maximize net returns from the divisions and a…

Answered: Formulate a LP model for the OECS bank…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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