Exam 8: Nonlinear Optimization Models

The measure of risk most often associated with the Markowitz portfolio model is the

Components that share a storage facility are called

Any feasible solution to a blending problem without pooled components is feasible to the problem with pooled components.

Shampooch is a mobile dog grooming service firm that has been quite successful developing a client base in the Dallas area. The firm plans to expand to other cities in Texas during the next few years. Shampooch would like to use its Dallas subscription data shown below to develop a model for forecasting service subscriptions in cities where it might expand. The first step is to estimate values for p (coefficient of innovation) and q (coefficient of imitation). Formulate the appropriate nonlinear program.

Any feasible solution to a blending problem with pooled components is feasible to the problem with no pooling.

An investor can pick the mean-variance tradeoff that he or she is most comfortable with by looking at a graph of the

Each point on the efficient frontier is the maximum possible risk, measured by portfolio variance, for the given return.

Components are referred to as pooled if they

Which of the following is incorrect?

It is possible for the optimal solution to a nonlinear optimization problem to lie in the interior of the feasible region.

There are nonlinear applications in which there is a single local optimal solution that is also the global optimal solution.

Financial planner Minnie Margin wishes to develop a mutual fund portfolio based on the Markowitz portfolio model. She needs to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the variance of the portfolio is minimized subject to the constraint that the expected return of the portfolio be at least 5%. Formulate the appropriate nonlinear program.

If the coefficient of each squared term in a quadratic function is positive, the function is

The function f (X, Y) = X ² + Y ² has a single global minimum and is relatively easy to minimize.

The Markowitz mean-variance portfolio model presented in the text is a convex optimization problem.

Nonlinear optimization problems can have only one local optimal solution.

Skooter's Skateboards produces two models of skateboards, the FX and the ZX. Skateboard revenue (in $l,000s) for the firm is nonlinear and is stated as (number of FXs)(5 -0.2 number of FXs) + (number of ZXs)(7 - 0.3 number of ZXs). Skooter's has 80 labor-hours available per week in its paint shop. Each FX requires 2 labor-hours to paint and each ZX requires 3 labor-hours. Formulate this nonlinear production planning problem to determine how many FX and ZX skateboards should be produced per week at Scooter's.

Cutting Edge Yard Care is a residential and commercial lawn service company that has been in business in the Atlanta metropolitan area for almost one year. Cutting Edge would like to use its Atlanta service subscription data below to develop a model for forecasting service subscriptions in other metropolitan areas where it might expand. The first step is to estimate values for p (coefficient of innovation) and q (coefficient of imitation). Formulate the appropriate nonlinear program.

The key idea behind constructing an index fund is to choose a portfolio of securities that

In the case of functions with multiple local optima, most nonlinear optimization software methods can get stuck and terminate at a local optimum.