Strategic planning for investment in R&D using decision analysis and mathematical programming

This paper investigates the strategic planning and investments associated with research and development (R&D) project selection and budgeting within a division of an aerospace firm. A model is described that is used in an R&D planning environment where considerable risks result from technolo...

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Bibliographic Details
Published in:IEEE transactions on engineering management 1985-05, Vol.EM-32 (2), p.84-90
Main Authors: Madey, Gregory R., Dean, Burton V.
Format: Article
Language:English
Subjects:
Contracts
Decision making models
economics
Expected utility
Investment policy
Investments
Marketing and sales
Mathematical analysis
Mathematical model
Mathematical programming
modeling
Planning
Portfolios
Programming
R&D
Research & development
research and development
Strategic planning
Theory
Utility
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Description
Summary:This paper investigates the strategic planning and investments associated with research and development (R&D) project selection and budgeting within a division of an aerospace firm. A model is described that is used in an R&D planning environment where considerable risks result from technological, economic, governmental, and market factors. Several forms of a multi-attribute utility (MAU) objective function are maximized using mathematical programming techniques. Approximate methods, including compromise programming and goal programming, are evaluated and yield results that are reasonably dose to and require less computation than more exact methods. Solutions are used to recommend to management an R&D portfolio that maximizes expected utility for the division.
ISSN:0018-9391
1558-0040
DOI:10.1109/TEM.1985.6447586