Optimal Timing of Projects

Abstract

This chapter presents a model to schedule the starting years of 10 projects. Each project has a random expenditure in its initial year, a random revenue in the following year, and then a stream of annual revenues. The annual revenues for any project remain constant for a given number of years and then decline at a given annual rate. All monetary values are expressed in millions of dollars. During the 1990s, major international corporations significantly improved their R&D performance by introducing risk analysis and portfolio management methodologies, in addition to new business-specific techniques.