The board of directors of General Wheels Company is considering seven large capital Investments. Each Investment can be made only once. These Investments differ in the estimated long-run profit (net present value) that they will generate as well as in the amount of capital required, as shown by the following table. Investment Opportunity 1 2 3 4 56 7 Estimated Profit ($million) Capital Capital Required for 17 10 15 19 7 13 9 Investment Opportunity ($million) Capital Available 1 2 3 4 5 6 7 ($million) 28 34 48 17 32 23 43 Click here for the Excel Data File 80 The total amount of capital available for these Investments is $80 million. Investment opportunities 1 and 2 are mutually exclusive, and so are 3 and 4. Furthermore, neither 3 nor 4 can be undertaken unless one of the first two opportunities is undertaken. There are no such restrictions on Investment opportunities 5, 6, and 7. The objective is to select the combination of capital Investments that will maximize the total estimated long-run profit (net present value). Formulate and solve a BIP model on a spreadsheet for this problem. a. Determine the combination of capital Investments that will maximize profit. Note: Leave no cells blank. Enter "O" wherever required.
The board of directors of General Wheels Company is considering seven large capital Investments. Each Investment can be made only once. These Investments differ in the estimated long-run profit (net present value) that they will generate as well as in the amount of capital required, as shown by the following table. Investment Opportunity 1 2 3 4 56 7 Estimated Profit ($million) Capital Capital Required for 17 10 15 19 7 13 9 Investment Opportunity ($million) Capital Available 1 2 3 4 5 6 7 ($million) 28 34 48 17 32 23 43 Click here for the Excel Data File 80 The total amount of capital available for these Investments is $80 million. Investment opportunities 1 and 2 are mutually exclusive, and so are 3 and 4. Furthermore, neither 3 nor 4 can be undertaken unless one of the first two opportunities is undertaken. There are no such restrictions on Investment opportunities 5, 6, and 7. The objective is to select the combination of capital Investments that will maximize the total estimated long-run profit (net present value). Formulate and solve a BIP model on a spreadsheet for this problem. a. Determine the combination of capital Investments that will maximize profit. Note: Leave no cells blank. Enter "O" wherever required.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Gadubhai
Transcribed Image Text:The board of directors of General Wheels Company is considering seven large capital Investments. Each Investment can be made only
once. These Investments differ in the estimated long-run profit (net present value) that they will generate as well as in the amount of
capital required, as shown by the following table.
Estimated Profit ($million)
Capital
Investment Opportunity
1 2 3 4 56 7
17 10 15 19
Capital Required for
Investment Opportunity
($million)
1 2 3 4 5 6 7
43 28 34 48 17 32 23
Capital
Available
($million)
80
7 13 9
Click here for the Excel Data File
The total amount of capital available for these Investments is $80 million. Investment opportunities 1 and 2 are mutually exclusive, and
so are 3 and 4. Furthermore, neither 3 nor 4 can be undertaken unless one of the first two opportunities is undertaken. There are no
such restrictions on Investment opportunities 5, 6, and 7. The objective is to select the combination of capital Investments that will
maximize the total estimated long-run profit (net present value).
Formulate and solve a BIP model on a spreadsheet for this problem.
a. Determine the combination of capital Investments that will maximize profit.
Note: Leave no cells blank. Enter "O" wherever required.
Undertake? (Enter 1 if "Yes", 0 if "No")
b. Determine the total profit.
Total profit
million
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Opportunity 1 Opportunity 2 Opportunity 3 Opportunity 4 Opportunity 5 Opportunity 6 Opportunity 7
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 9 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.