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Assignment 1

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Assignment 1

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    1. Assignment 1

    2. Problem Formulation x1 = number of special risk insurances to be sold x2 = number of mortgages to be sold Obj: Max(5x1 + 2x2) s.t.: 3x1 + 2x2 <= 2400 (Underwriting dept.) x2 <= 800 (Admin) 2x1 <= 1200 (Claims) x1, x2 >= 0 (Non-negativity)

    3. Graph

    4. Intersecting Line Method The two lines that meet at the optimal point are: 3x1 + 2x2 = 2400 2x1 = 1200 The equations are known as binding constraints. Solving for x1 and x2 in the two equations: x1 = 600; x2 = 300 Therefore, objective function value (z) = 5x1 + 2x2 = 5(600) + 2(300) = $3600

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