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A company is contemplating a research and development program emcompassing eight major projects. The company is constrained from embarking
on all projects by the number of available scientist (40) and the budget available for projects ($300,000). Following are the resources requirements and
the estimated profit for each project.

Project Expense ($000) Scientists Required Profit($000)

1 60 7 36
2 110 9 82
3 53 8 29
4 47 4 16
5 92 7 56
6 85 6 61
7 73 8 48
8 65 5 41

A. What is the maximum profit, and which projects should be selected?

B. Suppose that management decides that projects 2 and 5 are mutually exclusive. That is, the company should not undertake both. As
a result, what are the revised project portfolio and the revised maximum profit?

C. Suppose the management also deciedes to undertake at least two of the projects involving consumer products. (These happen to be
projects 5-8.) As a result, what are the revised project portfolio and the revised maximum profit?

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A. What is the maximum profit, and which projects should be selected?
Projects 2, 5, 6 must be selected. Maximum profit = 82+61+56 = 199 with investment of 287 with 22 scientists

B. Suppose that management decides that projects 2 and 5 are mutually exclusive. That is, the company should not undertake both. As
a result, what are the revised project portfolio and the revised maximum profit?
In that case Project 1,2,3 and 7 must be under taken. Maximum profit = 195 with investment of 296 and 32 scientists

C. Suppose the management also deciedes to undertake at least two of the projects involving consumer products. (These ...

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Ashish Sharma, MBA (IP)
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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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