On maximizing the net present value of a project under renewable resource constraints
Vanhoucke, Mario Demeulemeester, Erik Herroelen, Willy
Vanhoucke, Mario
Demeulemeester, Erik
Herroelen, Willy
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Publication Type
Journal article
Editor
Supervisor
Publication Year
2001
Journal
Management Science
Book
Publication Volume
47
Publication Issue
8
Publication Begin page
113
Publication End page
1121
Publication NUmber of pages
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Abstract
The resource-constrained project-scheduling problem with discounted cash flows is studied. Each activity of this resource-constrained project-scheduling problem has certain resource requirements and a known deterministic cash flow that can be either positive or negative. Deterministic cash flows are assumed to occur over the duration of the activities. Progress payments and cash outflows occur at the completion of activities. The objective is to schedule the activities subject to a fixed deadline to maximize the net present value subject to the precedence and resource constraints. With these features the financial aspects of project management are taken into account. A depth-first branch-and-bound algorithm that makes use of extra precedence relations is introduced to resolve a number of resource conflicts and a fast recursive search algorithm for the max-npv problem to compute upper bounds. The recursive search algorithm exploits the idea that positive cash flows should be scheduled as early as possible while negative cash flows should be scheduled as late as possible within the precedence constraints. The procedure has been coded in Visual C++, Version 4.0 under Windows NT, and has been validated on two problem sets.
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Keywords
Programme & Portfolio Management