Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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as well as the amount of investment required to undertake the
project.
Estimated profit
(millions)
Capital required
(millions)
1
E*
Development Project
3
4
2
$1 $1.8 $ 1.6
6 12
10
$0.8
4
5
$1.4
8
The owners of the firm, Dave Peterson and Ron Johnson, have
raised $20 million of investment capital for these projects. Dave
and Ron now want to select the combination of projects that
will maximize their total estimated long-run profit (net present
value) without investing more than $20 million.
a. Formulate a BIP model in algebraic form for this
problem.
b. Formulate and solve this model on a spreadsheet.
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Transcribed Image Text:as well as the amount of investment required to undertake the project. Estimated profit (millions) Capital required (millions) 1 E* Development Project 3 4 2 $1 $1.8 $ 1.6 6 12 10 $0.8 4 5 $1.4 8 The owners of the firm, Dave Peterson and Ron Johnson, have raised $20 million of investment capital for these projects. Dave and Ron now want to select the combination of projects that will maximize their total estimated long-run profit (net present value) without investing more than $20 million. a. Formulate a BIP model in algebraic form for this problem. b. Formulate and solve this model on a spreadsheet.
7.5. A real-estate development firm, Peterson and Johnson,
is considering five possible development projects. Using units of
millions of dollars, the following table shows the estimated long-
run profit (net present value) that each project would generate,
expand button
Transcribed Image Text:7.5. A real-estate development firm, Peterson and Johnson, is considering five possible development projects. Using units of millions of dollars, the following table shows the estimated long- run profit (net present value) that each project would generate,
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