Kloos Industries Has Projected the Availability of Capital Over Each

question 11

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:
a.Research and development of a promising new product
b.Plant expansion
c.Modernization of its current facilities
d.Investment in a valuable piece of nearby real estate
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Monies not invested in these projects in a given year will NOT be available for the 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 millions of dollars.
In addition,Kloos has decided to undertake exactly two of the projects.If plant expansion is selected,it will also modernize its current facilities.
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Formulate and solve this problem as a binary programming problem.

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Definitions:

Peaches

A sweet, juicy fruit with fuzzy skin and a stone or pit in the center, commonly eaten fresh or used in cooking and baking.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen, representing the cost of sacrificing the next best choice.

Oranges

A citrus fruit rich in vitamin C, grown in warm climates, and consumed either fresh or in juice form.

Peaches

Edible juicy fruits with fuzzy skins and a sweet taste, often grown in temperate regions.