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Malone Inc. has identified five potential new processes; however, the firm is constrained by its...

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Accounting

Malone Inc. has identified five potential new processes; however, the firm is constrained by its available budget and human resources. Each process is expected to generate a return (given by the net present value) but requires a fixed amount of cash and personnel. Because the resources are limited, all processes cannot be selected. Processes cannot be partially completed; thus, either the process must be undertaken completely or not at all. The data are given in the table below. If a process is selected, it generates the full value of the expected return and requires the full amount of cash and personnel shown in the table. Define Xi = 1 if process i is selected, and 0 otherwise.

Process 1

Process 2

Process 3

Process 4

Process 5

Available Resources

Expected Return (NPV)

$90,000

$110,000

$75,000

$70,000

$100,000

Cash requirements

$27,500

$41,500

$12,000

$24,500

$61,000

$150,000

Personnel requirements

5

3

2

5

3

12

Determine the expression that explains the personnel limitation.

A) 5X1+ 3X2 + 3X5 ? 12 B) 5X1+ 3X2 + 3X5 ? 12 C) 5X1 + 3X2 + 2X3 + 5X4 + 3X5 ? 12 D) 5X1 + 3X2 + 3X3 + 5X4 + 2X5 ? 12

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