R. Etgar et al., SCHEDULING PROJECTS TO MAXIMIZE NET PRESENT VALUE - THE CASE OF TIME-DEPENDENT, CONTINGENT CASH FLOWS, European journal of operational research, 96(1), 1997, pp. 90-96
Citations number
21
Categorie Soggetti
Management,"Operatione Research & Management Science","Operatione Research & Management Science
The problem of scheduling activities in a project to maximize its Net
Present Value (NPV) has been solved for the case where net cash flow m
agnitudes are independent of the time of realization. This paper model
s a more realistic version of this problem - because of incentive paym
ents and penalties for early and late event occurrences, respectively,
and because of changing costs of resources over time, net cash flow m
agnitudes are dependent on the time of realization. We formulate an op
timization program for this more general problem and present a simulat
ed annealing solution approach. We test different implementation strat
egies for this algorithm and suggest a method for choosing neighborhoo
d moves. We compare the NPVs of the solutions obtained from our formul
ation with the NPVs of early start schedules and with late start sched
ules for 168 different problems. These computational results show that
the simulated annealing approach consistently produces substantially
better solutions than the early start or late start schedules, Even po
or simulated annealing neighborhood moves give improved solutions for
most problems studied.