43. Daring the early 1970s, the political scandal Watergate shook the United Sta

Question

43. Daring the early 1970s, the political scandal Watergate shook the United States and toppled a presidency. While there were many aspects to the episode (robbery enemies lists, abuse of power, cover-ups, etc.), a key component was the "laundering" of funds from big money contributors to campaign coffers. This practice consists of channeling a large "gift" of money through various banks and individuals so that its source cannot be traced. Unfortunately, such activities continue today as evidenced by congressional investigations beginning in 1997 Suppose millionaire I. S. Halverson has $5000 (Gn reality, he would probably have 10 or 100 times this amount) that he would like to donate "anonymously" to the Independent National Party (INP). He might firs split the money up in smaller units and deposit the money in several bank accounts spread throughout the world. Money from these accounts could be mixed or further divided and sent to other accounts or individuals who, in turn, would do the same, until several checks for $1000 or less eventually arrive at party headquarters. To avert suspicion, a limit has been placed on the amount of each transaction between intermediaries. These limits are given in the network at the top of the next page depicting I. S. Halverson, the intermediaries, and the INP. Given these limitations, how much of the $5000 can I. S. Halverson launder to the INP? Note: The federal government employs management scientists who also use such models to help determine transaction limits that should be monitored.) Problem 413 1500 8 LS. Halverson INP Numbers on the arcs represent the maximum amount that can be laundered in either direction

Explanation / Answer

Objective Function:

It should minimization of network spread.(less no of people or intermediates required)

Constraints:

Total going out from I.S.Halverson=Total coming in INP.

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