The problem of short-term financing is known to be wry

The problem of short-term financing is known to be wry common to corporation. They often base some cash commitments, either to pay or receive, m the stint run. It is critical for them to figure out what would be the most economic way to fulfill the commitments. In particular, the company Analysis-C located in Ottawa has the following short-term cash commitments surfing to yes.

In the above table, a negative for positive) amount meat that the company would have to pay (or receive) the specified amount of cash at the start of dui month. The amount, are mated in thousands of dollars.

After consulting with some financial specialists, the management team of Analytics-C has identified two sources of funds they may use to finance the cash-flow requirement.

The first is to borrow money using a line of credit, which is available up to $100K per month at an interest rate1% per month. The second is to borrow money by issuing 90- day commercial paper, which can only be done in the from three months period. For example, if the company decides to borrow X amount by issuing 90-day commercial paper in January, they would need to pay back in April the borrowed amount, i.e. $X, plus 2% of that, i.e. 2% X. If they each month, if the company finds any excess fund, i.e. the cash left after fulfilling the cash requirement of that month, they can re-invest that amount at an interest rate of 0.3% per month.

Task I:

You are hired fairly recently and assigned to help determine how the company should schedule their short-term financing. The management team asks you to develop a financing plan that will maximize the cash amount at the end of June.

Report how to solve this problem by formulation a Linear Programming (I,P) model. In addition to following the “report to management” format, you should provide all the details, which includes but are not limited to the LP algebraic model formulation (i.e. decision variables, objective function, and constraints with detailed explanations). The Excel sheet including your LP spreadsheet model formulation, answer report and sensitivity report.

Moreover, the management team has the following questions for you, and you should provide your answer based on the Excel sensitivity report.