Question

Example 2 Projects B1 and B2 are mutually exclusive. Projects CI and C2 are mutually exclusive and dependent on the acceptance of B2. Finally, project D is dependent on the acceptance of Cl. Assuming that MARR-10% per year. Capital availability is limited to $48,000. Formulate the problem as LP model cash flow ($000) for end of year k 4 PW 1 Project 0 -50 -30 20 20 $13.40 12 $8.04 4 ($1.32) 5 $0.85 6 $9.02 20 20 B1 12 12 12 B2 4 4 4 -14 C1 -15 C2 -10

Answer 1

H15 Solver Parameters SHSİS Set Objective: 10% Min Acceptable Rate of Return (MARR) Capital Availability 48,000 5 Pre-requisite 4 PW By Changing Variable Cells: B1 SCS13:SGS13 8.04 B2 12 12 8 B2 C1 1.32 Subject to the Constraints: 9 B2 C2 15 0.85 SCS13:SGS13 binary SH516 -SF53/1000 SH$18 >= SFS2 10 C1 9.02 Change 82 12 B1 C1 C2 Delete 13 8.04 9.02 Reset All 15 13.4 889 16 Investment 30 14 15 Load/Save 17 Make unconstrained Variables Non-Negative 18 MARR 19 Select a Solving GRG Nonlinear Method: 21 Solving Method Select the GRG Nonlinear engine for Solver Problems that are smooth nonlinear. Select the LP Simplex engine for linear Solver Problems, and select the Evolutionary engine for Solver problems that are non-smooth. 23 26 Solve 27 se Sheet

This can be solved with Data >> Solver Function, with above constraints.

So based on above, Projects to be pursued are B2, C2 and D with total investment of 45K, Present worth of 8.89 (max Possible), with returns of 20%.