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A Capital Budgeting, Mixed Integer, Temporal Programming Model
Author(s) -
COLYER DALE
Publication year - 1968
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1968.tb02408.x
Subject(s) - integer programming , capital budgeting , integer (computer science) , investment (military) , linear programming , capital (architecture) , classification of discontinuities , range (aeronautics) , interdependence , cash flow , branch and price , operations research , economics , computer science , mathematical optimization , microeconomics , mathematics , finance , engineering , geography , mathematical analysis , archaeology , aerospace engineering , project appraisal , politics , political science , programming language , law
A temporal model utilizing mixed integer programming was constructed to evaluate investment alternatives in combination with the present value method of capital budgeting. As such it is a first step beyond conventional linear and integer programming in developing relevant capital decision‐making models. The procedure permits the consideration of investment in discontinuous (lumpy) inputs which also are interdependent —thus overcomes some of the principle weaknesses of other capital budgeting procedures. The model was tested with a relatively simple five‐year model including land and machinery investment alternatives for a cash grain farm and proved capable of handling both the discontinuities and interrelationships. The possibilities of extending the model to include a greater range of alternatives and more complicated interrelationships such as reinvestment of intermediate cash throwoffs also was explored .