1. Identify decision variables

• 1 month investment (6% yield) = Y₁
• 3 month investment (8% yield) = Y₂
• 7 month investment (12% yield) = Y₃

1. Identify objective statement

• Maximize Investment opportunities while paying bills on time
• Maximize Z = .06Y₁ + .08Y₂ + .12Y₃

1. Identify constraints

• S = Monthly salary: $29,400 / 12 months = $2,450
• B = Starting Budget = $3,800
• January = X₁ = B + S  – 2,750
• February = X₂ = X₁ + S – 2860
• March = X₃            = X₂ + S – 2335
• April = X₄ = X₃ + S – 2,120
• May = X₅ = X₄ + S – 1205
• June = X₆ = X₅ + S – 1600
• July = X₇ = X₆ + S – 3050
• August = X₈ = X₇ + S – 2300
• September = X₉ = X₈ + S – 1975
• October = X₁₀ = X₉ + S -1670
• November = X₁₁ = X₁₀ + S – 2710
• December = X₁₂ = X₁₁ + S – 2980

1. Develop model for Susan (using her $3,800 of savings)

1. Develop model for Susan if she only uses a portion of her $3,800 towards her budget and what is the optimal amount  to invest versus how much she should use for the budget

DETAILED ASSIGNMENT

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