Which projects should be selected? What is the total net present value of these projects
Which projects should be selected? What is the total net present value of these projects
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter6: Optimization Models With Integer Variables
Section: Chapter Questions
Problem 76P
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Question
Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 3 projects. Projects 2 and 5 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution.
| Project | Cost | |
| 1 | $225,000 | $770,000 |
| 2 | $200,000 | $580,000 |
| 3 | $235,000 | $400,000 |
| 4 | $275,000 | $630,000 |
| 5 | $275,000 | $720,000 |
Which projects should be selected?
What is the total net present value of these projects
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