Six projects have been identified for possible implementation by a company that

Question

Six projects have been identified for possible implementation by a company that makes dry ice blasters, machines that propel tiny dry ice pellets at supersonic speeds so they flash freeze and then lift grime, paint, rust, mold, asphalt, and other contaminants off in-place machines and a wide range of surfaces. The present worth of each project has been determined. Identify all acceptable mutually exclusive bundles if the budget limitation is $35,000. Arrange the acceptable bundles in such a way that the total PW values are in ascending order.

Project Project PW at 15%, $ L 29,000 M 11,000 N 41,000 O 35,000 P 6,000 Q 2,000

Explanation / Answer

The acceptable bundles with a budget limitation of $ 35,000 is project O and project L,P . The firm may choose project O in which case this will be the only project as the cost equals the budget limination. The firm may also choose project L&P and exclude O and . The total budget of project L&P is $ 35,000 i.e. $ 29,000 + $ 6000.

Thus the mutually exclusive bundles are project O or project L&P.  

Acceptable bundles Project Project PW L,P $29000 & $6000 O 35,000

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