A Research Director Must Pick a Subset of Research Projects

question 22

Essay

A research director must pick a subset of research projects to fund over the next five years. He has five candidate projects, not all of which cover the entire five-year period. Although the director has limited funds in each of the next five years, he can carry over unspent research funds into the next year. Additionally, up to $30K can be carried out of the five-year planning period. The following table summarizes the projects and budget available to the research director. ​
Define the ILP formulation for this capital budgeting problem.

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Definitions:

Cost Allocated

Cost allocated refers to the process of distributing expenses in proportion to the cost centers or departments responsible for incurring them.

Assembly Department

A section within a manufacturing facility where components are assembled into finished products.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, with fixed overhead costs being treated as period expenses.

Australian Accounting Standards

The principles and guidelines set by the Australian Accounting Standards Board that govern the reporting and financial practices of entities in Australia.