A local SME bank provides 4 types of loans of its customers andthese loans yield the following interest rates to the Bank:
- Personal Loan 1: Â Â Â Â Â Â Â 14%
- Personal Loan 2: Â Â Â Â Â Â Â 20%
- HomeLoan:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 20%
- Overdraft:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 10%
The Bank has a maximum foreseeable lending capability of Rs 700million and is further constrained by the policies:
- Personal Loan 1 must be at least 45% of all personal loansissued and at least 15% of all loans issued (in Rs terms);
- Personal Loan 2 cannot exceed 40% of all loans issued (in RsTerms);
- To avoid public displeasure and the introduction of a new tax,the average interest rate on all loans must not exceed 10%.
Formulate the Linear ProgrammingProblem.
Note: To maximise interest incomewhilst satisfying the policy limitations.
