IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v33y1987i6p800-806.html
   My bibliography  Save this article

A Constrained Capital Budgeting Problem with Applications to Repair Kit Selection

Author

Listed:
  • John W. Mamer

    (Graduate School of Management, University of California, Los Angeles, California 90024)

  • Andrew W. Shogan

    (School of Business Administration, University of California, Berkeley, California 94720)

Abstract

We consider a capital budgeting problem in which each potential project requires the performance of a known set of activities. In general, these sets of activities are not mutually exclusive. However, when a particular activity is common to the requirements of multiple projects, a single performance of the activity simultaneously satisfies the requirements of the multiple projects. Associated with the performance of each activity are two quantities: a known fixed cost and a consumption of a known amount of a scarce resource. Because the sets of activities required by the projects are not mutually exclusive, we cannot apportion an activity's fixed cost or resource consumption to a single project. In this paper, we formulate this capital budgeting problem (and a slight variant) as a maximal network flow problem with a side constraint, and we report computational experience using Lagrangian relaxation to find an optimal solution. We also discuss an application to the selection of parts and tools to include in a field repair kit used to fix a variety of types of breakdowns.

Suggested Citation

  • John W. Mamer & Andrew W. Shogan, 1987. "A Constrained Capital Budgeting Problem with Applications to Repair Kit Selection," Management Science, INFORMS, vol. 33(6), pages 800-806, June.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:6:p:800-806
    DOI: 10.1287/mnsc.33.6.800
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.33.6.800
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.33.6.800?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark S. Hillier & Margaret L. Brandeau, 1998. "Optimal Component Assignment and Board Grouping in Printed Circuit Board Manufacturing," Operations Research, INFORMS, vol. 46(5), pages 675-689, October.
    2. Vliegen, I.M.H. & Kleingeld, P.A.M. & van Houtum, G.J., 2010. "Separate tools or tool kits: An exploratory study of engineers' preferences," International Journal of Production Economics, Elsevier, vol. 125(1), pages 173-184, May.
    3. Crama Yves & Klundert Joris van de, 1996. "The approximability of tool management problems," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Rippe, Christoph & Kiesmüller, Gudrun P., 2023. "The repair kit problem with imperfect advance demand information," European Journal of Operational Research, Elsevier, vol. 304(2), pages 558-576.
    5. K Liu & J-A Li & Y Wu & K K Lai, 2005. "Analysis of monitoring and limiting of commercial cheating: a newsvendor model," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(7), pages 844-854, July.
    6. Jayashankar M. Swaminathan & Sridhar R. Tayur, 1998. "Managing Broader Product Lines through Delayed Differentiation Using Vanilla Boxes," Management Science, INFORMS, vol. 44(12-Part-2), pages 161-172, December.
    7. Crama, Y. & van de Klundert, J., 1996. "The approximability of tool management problems," Research Memorandum 034, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    8. Jing-Sheng Song, 1998. "On the Order Fill Rate in a Multi-Item, Base-Stock Inventory System," Operations Research, INFORMS, vol. 46(6), pages 831-845, December.
    9. Crama, Yves, 1997. "Combinatorial optimization models for production scheduling in automated manufacturing systems," European Journal of Operational Research, Elsevier, vol. 99(1), pages 136-153, May.
    10. Rachel Q. Zhang, 1999. "Expected time delay in multi‐item inventory systems with correlated demands," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(6), pages 671-688, September.
    11. Vliegen, I.M.H. & van Houtum, G.J., 2009. "Approximate evaluation of order fill rates for an inventory system of service tools," International Journal of Production Economics, Elsevier, vol. 118(1), pages 339-351, March.
    12. Liu, Ke & Li, Jing-An & Lai, Kin Keung, 2004. "Single period, single product newsvendor model with random supply shock," European Journal of Operational Research, Elsevier, vol. 158(3), pages 609-625, November.
    13. Anabela Costa & José Paixão, 2010. "An approximate solution approach for a scenario-based capital budgeting model," Computational Management Science, Springer, vol. 7(3), pages 337-353, July.
    14. Prak, Dennis & Saccani, Nicola & Syntetos, Aris & Teunter, Ruud & Visintin, Filippo, 2017. "The Repair Kit Problem with positive replenishment lead times and fixed ordering costs," European Journal of Operational Research, Elsevier, vol. 261(3), pages 893-902.
    15. Gerald G. Brown & Robert F. Dell & Alexandra M. Newman, 2004. "Optimizing Military Capital Planning," Interfaces, INFORMS, vol. 34(6), pages 415-425, December.
    16. Christoph Rippe & Gudrun P. Kiesmüller, 2023. "The added value of advance demand information for the planning of a repair kit," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(1), pages 311-335, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:33:y:1987:i:6:p:800-806. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.