Assignment:
Problem
Allied Products has six R&D projects that are potential candidates for selection during thee upcoming fiscal year. The table at the bottom of the page provides the expected net present value (NPV) and capital requirements over the next five years for each project. The table also indicates the planned budget expenditures for the entire R&D program during each of the next five years. Which projects should Allied Products select to maximize the total NPV given its budget constraints?
1. Formulate this problem as a linear programming problem.
2. Solve the problem and indicate which projects must be selected. What is Allied's total NPV? For each year clearly state the amount of the R&D budget that is used and the amount that is left over.