73-220-Lecture08 - LinearProgramming: ApplicationsIV 73220...

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1 Linear Programming: Applications IV 73-220 Lecture 08
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2 Agenda Review for Last Class Understand the standard approaches to LP formulation. Media selection Production and inventory planning More Applications Financial planning Next Class
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3 Financial Planning Anne Alyze is the investments manager for an organization that has just signed a contract to purchase some new equipment costing $750,000. The contract calls for payment of $150,000 two months from now and payment of the balance six months from now when the equipment will be delivered. To meet this schedule of payments, Anne intends to immediately set up a sinking fund , whose principal and interest will be used in the future to make a capital expenditure. Because the available investments will generate additional cash before the scheduled payments are due, Anne knows she can start the sinking fund with less than the full purchase price of $750,000. How much less depends on the quality of the investment opportunities
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73-220-Lecture08 - LinearProgramming: ApplicationsIV 73220...

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