Binary Integer Programming

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MGMT 430 Binary Integer Programming AssignmentWeek 4Dropbox 5

Consider a small Oil production firm with 6 competing oil production projects, A – F.

The table below shows the estimated long-term profit (Net Present Value) for each project as well as the amount of investment capital required to start the project.

You have been contacted to help select the best combination of projects to maximize the Net Present Value subject to the capital investment limit of $32 million.

Production Projects

A

B

C

D

E

F

Estimated Profit ($million)

$26

$21

$18

$30

$28

$22

Capital required ($million)

$11

$8

$14

$19

$19

$13

1)  Formulate a Binary Integer Programming (BIP) model on a spreadsheet.

2)  Solver the model using Solver.