A dynamic programming—integer programming algorithm for allocating touristic investments

Abstract

In a companion paper (1) a general mathematical model for the allocation of touristic investments was developed. In this paper a solution methodology for the model is developed based on the principles of dynamic programming. At each stage of the dynamic program an integer program is solved to limit the range of values of the state variable which must explicitly be considered. The algorithm is illustrated through an example, and the advantages of the solution procedure are explained by considering the solution as a base for the strategic decision making in the touristic sector.