The Texas Electronics Company (TEC) is contemplating a research and development program encompassing eight major projects

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Practice Problems

2) Selecting Projects

The Texas Electronics Company (TEC) is contemplating a research and development program encompassing eight major projects. The company is constrained from embarking on all projects by the number of available scientists (40) and the budget available for projects ($300,000). Following are the resource requirements and the estimated profit for each project:

Project	Expense	Scientists	Profit ($000)
1	60	7	36
2	110	9	82
3	53	8	29
4	47	4	16
5	92	7	56
6	85	6	61
7	73	8	48
8	65	5	41

a. What is the maximum profit, and which projects should be selected?

b. Suppose that management decides that projects 2 and 5 are mutually exclusive. That is, TEC should not undertake both. As a result, what are the revised project portfolio and the revised maximum profit?

c. Suppose that management also decides (in addition to b above) to undertake at least two of the projects involving consumer products. (These happen to be projects 5-8). As a result, what are the revised project portfolio and the revised maximum profit?