In Chapter 11, Linear Programming was applied to those investments satisfying the following assumptions:Additivity within activities: resource consumption is constant per unit of output; there are no economies of scale. | Ch 12: More Advanced Linear Programming Concepts and Methods Applying Linear Programming to Those Investments in Which The Simplifying Assumptions of Basic LP Analysis Do Not Hold. Simple Application of L. P. In Chapter 11, Linear Programming was applied to those investments satisfying the following assumptions: Additivity within activities: resource consumption is constant per unit of output; there are no economies of scale. Divisibility within activities: partial investments can be implemented. There is no requirement to accept equipment in discrete sizes. Independence of activities: there is no recognition of productive or financial interdependencies. Extensions to the Basic Application of . This chapter extends the basic applications of L P, to allow investment analysis where projects take on a more ‘real word’ flavor: ie, where some simplifying assumptions are extensions include: Allowing more activities and constraints Recognizing indivisible investments . | Ch 12: More Advanced Linear Programming Concepts and Methods Applying Linear Programming to Those Investments in Which The Simplifying Assumptions of Basic LP Analysis Do Not Hold. Simple Application of L. P. In Chapter 11, Linear Programming was applied to those investments satisfying the following assumptions: Additivity within activities: resource consumption is constant per unit of output; there are no economies of scale. Divisibility within activities: partial investments can be implemented. There is no requirement to accept equipment in discrete sizes. Independence of activities: there is no recognition of productive or financial interdependencies. Extensions to the Basic Application of . This chapter extends the basic applications of L P, to allow investment analysis where projects take on a more ‘real word’ flavor: ie, where some simplifying assumptions are extensions include: Allowing more activities and constraints Recognizing indivisible investments Allowing inter-year resource borrowings and transfers Recognizing interdependent projects Treating mutually exclusive investments Recognizing threshold investments, economies of scale, multiple goals and investment risk. Explanations of the ‘Extension’ Ideas I. More Activities and Constraints: this notion deals with more complex resource mixes, and more constraints, or combinations of projects Indivisible Investments: Most projects are not physically divisible. For example, power stations are not divisible, although they can vary in size as to scale. Inter-Year Transfers: Capital and supplies may become available at different times, or surplus amounts may be able to be transferred between years. Explanations of the ‘Extension’ Ideas II. Interdependent projects: projects may provide mutual support and resources, or infrastructure to each other. Mutually Exclusive Investments: A casino built on a site will preclude the construction of an hotel or sporting facility. Only one of .
