Kloos Industries Has Projected the Availability of Capital Over Each

question 39

Essay

Kloos Industries has projected the availability of capital over each of the next three years to be $850,000,$1,000,000,and $1,200,000,respectively.It is considering four options for the disposition of the capital:
(1)Research and development of a promising new product
(2)Plant expansion
(3)Modernization of its current facilities
(4)Investment in a valuable piece of nearby real estate
Monies not invested in these projects in a given year will NOT be available for following year's investment in the projects.The expected benefits three years hence from each of the four projects and the yearly capital outlays of the four options are summarized in the table below in $1,000,000's.
In addition,Kloos has decided to undertake exactly two of the projects,and if plant expansion is selected,it will also modernize its current facilities. $$\begin{array} { l c c c c } & { \text { Capital Outlays } } &&& \text { Projected } \\\text { Options } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { B enefits } \\\hline \text { New Product R\&D } & .35 & .55 & .75 & 5.2 \\\text { Plant Expansion } & .50 & .50 & 0 & 3.6 \\\text { Modernization } & .35 & .40 & .45 & 3.2 \\\text { Real Estate } & .50 & 0 & 0 & 2.8\end{array}$$ Formulate and solve this problem as a binary programming problem.

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Definitions:

Business Performance

The measurement of the effectiveness and efficiency of a company's operations, often evaluated through financial metrics, productivity, and customer satisfaction.

Accurate Information

Data or details that are correct, precise, and free of errors, providing a true representation of facts or reality.

Emotion

A complex psychological state involving an individual's subjective experience, physiological response, and behavioral expression.

Psychological Empowerment

The perception of having control over one's work environment, leading to increased motivation, job satisfaction, and performance.