AID22134: An investor is considering investing in two securities ‘A’ and ‘B’. The risk and return associated with these securities are different. Security ‘A’ gives a return of 9% and has a risk factor of 5 on a scale of zero to 10. Security ‘B’ gives a return of 15% but has a risk factor of 8 on a scale of zero to 10. The total amount to be invested is Rs. 500000/- Total minimum returns on the investment should be 12%. The maximum combined risk should not be more than 6. Formulate as Linear Programming Problem (LPP).
b) There is a small company in the town of Mysore which has recently become engaged in the production of office furniture. The company manufactures tables, desks, and chairs. The production of a table requires 8 kgs of wood and 5 kgs of metal and is sold for Rs 8000; a desk uses 6 kgs of wood and 4 kgs of metal and is sold for Rs 6000; and a chair requires 4 kgs of both metal and wood and is sold for Rs 5000. We would like to determine the revenue-maximizing strategy for this company, given that their resources are limited to 100 kgs of wood and 60 kgs of metal. How will a much bigger company (like IKEA) determine the appropriate amount of money that should be offered for a unit of each type of resource, such that the offer will be acceptable to the smaller company while minimizing the expenditures of the larger company?
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