An Integer Programming Application To The Capital Budgeting Problem In A Large Multinational Firm In Metro Manila

Ma. Crisanta  R. Lim,; Helen  Ornico,; Purba  Rao,

An Integer Programming Application To The Capital Budgeting Problem In A Large Multinational Firm In Metro Manila

Ma. Crisanta R. Lim | Helen Ornico | Purba Rao

Abstract:

This study concerns endeavors to formulate an integer programming model for a certain capital budgeting problem. The company considered is contemplating replacement of one or more of its production lines by new lines which would be able to produce the required amounts with lower costs. For this purpose, the present values of existing lines and new possible lines have been estimated, and a comparison has been carried out in the 0-1 integer programming model. The results obtained, with the help of Branch and Bound technique, specify clearly which lines are to be replaced and which may be closed entirely, and the exact monetary benefits to be accrued quantitatively.