Textbook Problem

Project Selection AT Ewing Natural Gas

This is an extension of Case 2.1 from Chapter 2, so you should read that case first. It asks you to develop a spreadsheet model using a 0-1 variable for each potential project so that Cliff Erland, Manager for Project Development, can easily see the implications of approving any set of projects. Cliff would now like you to find the optimal set of projects to approve. Specifically, he has asked you to do the following. Summarize all of your results in a concise memo.

Using the spreadsheet model from Case 2.1 as a starting point, use Solver to find the optimal set of projects to approve. The solution should maximize the total NPV from the approved projects, and it should satisfy the constraints imposed by CEO J. R. Bayer and the functional areas: (1) capital expenditures over the three years should not exceed $10 billion; (2) capital expenditures in any single year should not exceed $4 billion; and (3) at least one project must be approved for each functional area.