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A robust goal programming model for the capital budgeting problem

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  • Fatemeh Ghasemi Bojd
  • Hamidreza Koosha

Abstract

Considering financial limitations, organizations should choose among various investment opportunities. Wrong decision making for selecting projects may lead to waste of resources as well as opportunity cost and negative long term consequences. Thus, capital budgeting problem can be solved to make proper decisions. Some of the main parameters of these problems, e.g., cash flows, are not deterministic. In addition, budget constraints of the capital budgeting problem are soft, i.e., they can be violated. In this paper, we propose a new model for the capital budgeting problem which can deal with uncertainty and benefits from soft constraints so that it can still provide a feasible solution. Goal programming is used to increase model flexibility and robust optimisation is applied to deal with uncertainty. The model is examined with different numerical illustrations. Finally, results are analysed and advantages of the new model are discussed. Results are promising and the approach is highly tractable and easy to implement.

Suggested Citation

  • Fatemeh Ghasemi Bojd & Hamidreza Koosha, 2018. "A robust goal programming model for the capital budgeting problem," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(7), pages 1105-1113, July.
    • Handle: RePEc:taf:tjorxx:v:69:y:2018:i:7:p:1105-1113
    DOI: 10.1080/01605682.2017.1389673
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    Cited by:

    1. Dai, Jingqi & Li, Zongmin, 2023. "An equilibrium approach towards sustainable operation of a modern coal chemical industrial park," Omega, Elsevier, vol. 120(C).
    2. Jones, D.F. & Treloar, R. & Ouelhadj, D. & Glampedakis, A. & Bartmeyer, P., 2024. "Incorporation of poverty principles into goal programming," Omega, Elsevier, vol. 127(C).
    3. Erfan Babaee Tirkolaee & Zahra Dashtian & Gerhard-Wilhelm Weber & Hana Tomaskova & Mehdi Soltani & Nasim Sadat Mousavi, 2021. "An Integrated Decision-Making Approach for Green Supplier Selection in an Agri-Food Supply Chain: Threshold of Robustness Worthiness," Mathematics, MDPI, vol. 9(11), pages 1-30, June.

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