Investment Strategy Linear Programming

1407 words 6 pages
INVESTMENT STRATEGY REPORT

Submitted to J. D. Williams, Inc.

By

Mizar Gonzalez

Industrial Engineering Department
Southern Polytechnic State university

404-519-2792

February 20, 2008

EXECUTIVE SUMMARY

This report is our recommendation for an optimal investment strategy that would allow J. D. Williams, Inc. to maximize the annual yield of an investment of $800,000 in a diversified portfolio of funds. To find the investment that would result in the greatest annual yield we have formulated a linear program that takes into account the requirements for the client of J. D. Williams, Inc. The requirements for the investment portfolio can be found on the section titled “Problem Description” The greatest annual
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Growth fund $ 160, 000, Income fund $ 360, 000, and Money Market fund $ 280, 000. at 14% the high risk and low yield of the growth fund makes it the least attractive option.

CONCLUSION It is my personal recommendation that J. D. Williams, Inc. implement linear programming for the evaluation of investment portfolios in the future. The creation of the linear program to solve J. D. Williams, Inc. will help solve many different problems with future clients. J. D. Williams, Inc. will benefit immensely if this model is used with later clients and will serve to evaluate an optimal result with many different variables. As far as this investment portfolio is concerned, if the risk index assigned to the prospective client could be increased, the annual yield could be increased by allowing more investment in higher yielding funds.

APPENDIX

1. Anderson, D.R., D.J. Sweeney, and T.A. Williams. Introduction to Management Science: Quantitative Approaches to Decision Making, 11th Edition.

2. Management Scientist, Version 6.0 (Software accompanying Anderson, D.R., D.J. Sweeney, and T.A. Williams. Introduction to Management Science: Quantitative Approaches to Decision Making, 11th Edition.

APPENDIX
Formulation and solution for J. D. Williams investment strategy problem
LINEAR PROGRAMMING PROBLEM

MAX 0.18X1+0.125X2+0.075X3

S.T.

1) 1X1+1X2+1X3=800000 2)

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