Swinging on the Branch of a Tree: Project Selection Applications

Sidney W. Hess
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Sidney W. Hess: Management Department, College of Business and Administration, Drexel University, Philadelphia, Pennsylvania 19104

Interfaces, 1993, vol. 23, issue 6, 5-12

Abstract: Selecting research and development projects is always difficult because data for assessment are seldom available. ICI Americas used simple decision trees successfully to screen new product ideas and decide on a major effort in new process research. The new process research model incorporated only 10 variables, making estimation feasible; a visual sensitivity analysis gave management confidence in the model conclusions. The screening model incorporated qualitative selection criteria (for example, quick development, low risk, patentable, low capital, high sales) into a single quantitative expression of expected net present value. ICI Americas used it to select projects from 53 new product ideas. These examples illustrate the value of a logical, simple model even when data are sparse.

Keywords: research and development; project selection; industries: chemical (search for similar items in EconPapers)
Date: 1993
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