Project selection under uncertainty. Dynamically allocating resources to maximize value (Q1886089)

This book is rooted in the mathematical theory of resource constrainted optimization with the goal of maximization quantitative turns where a limiting budget forces the multicriteria back to optimization of a quantitative ``composite goal''. It attempts to broaden the portfolio discussion in two ways. First, simplified models appropriate for a new product development context are discribed where the lack of precise data is typical. Second, not only the annual portfolio review is discussed, but also what should be done with ideas as the emerge, and how projects should be prioritized once they are funded and ongoing. Qualitative decision rules and robust principle are developed being more easily applicable in practice than complex mathematical programming models. This book has 7 chapters. After the introduction to the portfolio selection problem (chapter 1), chapter 2 describes what has been done so far as operational and strategic decisions. Chapter 3 regards the dynamic selection of a new product development. After the model setup, increasing and decreasing returns are regarded. It follows decreasing returns and market interactions respectively risk aversion, a numerical example, \(n\) product lines and \(T\) periods. Chapter 4 applies project selection at GemStone, Inc., a diamond producer. Chapter 5 (admitting projects one-by-one as they arrive) derives an optimal admission policy for projects of varying potential reward that arrive at unpredictable points of time. Chapter 6 prioritizes ongoing projects during execution. Chapter 7 drew some high-level conclusions to be relevant for managers responsible for portfolio management.