Optimal Sequencing and Resource Allocation in Research and Development Projects

Daniel Granot and Dror Zuckerman
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Daniel Granot: Faculty of Commerce and Business Administration, The University of British Columbia, Vancouver, BC, Canada
Dror Zuckerman: Business School, Hebrew University, Jerusalem, Israel

Management Science, 1991, vol. 37, issue 2, 140-156

Abstract: The main purpose of this study is to construct a suitable research and development (R&D) model which would facilitate the analysis of activity sequencing and resource allocation in R&D projects. In the proposed model, essential characteristics of R&D projects are incorporated. Namely, the activities and the technological specifications of the project are selected dynamically, and the stopping time of the R&D process is introduced as a decision variable to be determined endogeneously. We characterize the collection of optimal sequencing of R&D activities that would maximize the expected net present value of the project, and we evaluate the possibility of incorporating various learning aspects into the model. We further analyze a resource allocation problem associated with the R&D model. It is shown that in certain cases one can efficiently implement a greedy-optimal resource allocation procedure for increasing the expected net present value of the R&D project.

Keywords: research and development; sequencing; resource allocation; greedy heuristic (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:37:y:1991:i:2:p:140-156

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