A company is planning its capital budget over the next several years. There areeight potential projects under consideration. A calculation has been made of the expected netpresent value of each project, along with the cash outflow that would be required over the nextfour years. These data, along with the cash that is available each year, are shown in the tablebelow. (If any of the cash available in a given year is not fully used for these projects, it willbe used in other ways and so will not be available in later years.) There also are the followingspecial constraints: (a) at least one of project 1, 2, or 3 must be done, (b) project 6 and 7cannot both be done, and (c) project 5 can only be done if project 6 is done. The objective isto determine which projects should be pursued to maximize the total expected net presentvalue.Year 1Year 2Year 3Year 4NPV(Smil)Cash Outflow Required (Smillion)Project121322232110 123560372234233054211 15 24 1730433222Formulate a BIP model in algebraic form for this problem72361168∞542542218CashAvailable(Smillion)20202020

BIP stands for Binary Integer programming. It isa special case of LPP wherein the decision variable…

Answered: A company is planning its capital…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Formulate a chase sales and operations plan for a company with the following predicted demand: Month 1 2 3 4 5 6 Total Demand 55,200 49,600 12,800 24,800 50,400 25,600 218,400 The beginning workforce is 160 employees. The monthly output per employee is 400 units. The cost to hire and lay off a worker are $2,500 and $3,500, respectively. The cost to carry an item in inventory for one month is estimated at $14, and the stockout cost is $25 per unit. Show the production schedule, the inventory levels, and the changes in the workforce…
It is summertime and your winter coat factory is trying to decide its production schedule and staffing level for the next season. You are forecasting a demand of 5000 coats in October, 8000 coats in November, 8000 coats in December, 12000 coats in January, 12000 coats in February, and 9000 coats in March. You want to manufacture these coats at the lowest cost possible/ The first decision you need to make is how many people to hire. Each employee will cost $2500 a month. You don’t want to hire or fire any employees mid-season in order to minimize disruptions in your factory floor. You can have employees idle if there isn’t sufficient work for them to do. Employees still need to be paid even if they are idle. An employee works 20 business days a month and takes half a day to produce one coat. The employees can also be asked to work overtime, in which case you need to pay them $70 per coat they produce. You don’t need to assume there is any capacity constraint on the number of overtime…
Kualoa Corporation is trying to assess the risk of two possible capital budgeting proposals. The company has developed pessimistic, most likely, and optimistic estimates of the annual cash inflows. They are given in the following table. The firm's cost of capital is 10 percent. What is the range of the annual cash inflows for Project A?
19 of Vision Company purchased treasury stock with a cost of $16,000 during 2017. During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $860,000. Cash flows from financing activities for 2017 total Select one: a. $840,000 net cash inflow b. $856,000 net cash inflow c. $860,000 net cash outflow d. $824,000 net cash inflow
Uncertainties and risks are always associated with large real world projects and may obstacle and threaten projects in some ways. Failure in accurately identifying the project risks increases the total cost and may cause social and environmental damages as well as casualties during project execution. The aim of this study is to develop a mathematical programming model for selecting risk response strategies for construction projects. All risk response strategies for the analysed project have been identified and a mathematical model is presented based on project iron triangle; time, cost and quality to obtain the optimal risk response strategy for the construction project.Uncertainties and risks are the inherent characteristics of the real world construction projects. The project risk management deals with identifying and controlling the risks before they occur. Various risks happen in project execution phase which may reduce the performance efficiency and even cause the project failure.…
The following is a breakdown of supplying and installing a piece of equipment to a project owner, atthe time of contract: EGPCost of equipment 250,000Manpower (installation) 50,000Overhead and profits 70,000i – Calculate the price of supplying and installing the equipmentii – If the supply and installing of the equipment was delayed by the project owner, calculate theescalated price of works based on the FIDIC Red Book 1990 formula given:Updated cost of equipment 270,000 EGPBase price index of manpower 123.2Updated price index of manpower 144.9
Place-Plus, a real estate development firm, is considering several alternative development projects. These include building and leasing an office park, purchasing a parcel of land, and building an office building to rent, buying and leasing a warehouse, building a strip mall, and building and selling condominiums. The financial success of these projects depends on interest rate movement in the next 5 years. The various development projects and their 5-year financial return (in €1,000,000s) given that interest rates will decline, remain stable, or increase, are shown in the following image of the payoff table: a) Place-Plus is dissatisfied with the economist’s estimate of the probabilities of future interest rate movement, so it is considering having a financial consulting firm provide a report on future interest rates. The consulting firm can cite a track record which shows that 80% of the time when interest rates declined, it had predicted they would, whereas 10% of the time when…
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