BU275 Lecture Notes - Lecture 10: Carrying Cost, 5,6,7,8
Document Summary
Problem 1: research labs, inc. wishes to determine which r&d projects to fund next year. Management has allocated million for new projects. The objective is to generate the highest return from the investment of these funds. The following table specifies the estimated roi (return on investment) for each of these projects. If a project is undertaken, at least sh. 5 million must be allocated to it. In order to stimulate a wider r&d portfolio, the board of directors has stipulated that at most million can be invested in any project. A project"s total return is the product of its roi and the amount invested in the project: for technological reasons, the decisions to fund certain projects are interdependent. Project 2 and project 3 both depend upon project 1 being funded. (if project 1 is not funded, neither project 2 nor project 3 can be funded. )
