The Use of Decision Analysis in Capital Investment Problems.
MASSACHUSETTS INST OF TECH CAMBRIDGE OPERATIONS RESEARCH CENTER
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This paper provides a framework for the formulation and analysis of capital investment projects and illustrates the use of this framework in offering recommendations for a decision affecting a major mining company. The decision situation being formulated and analyzed in this study corresponds to an actual project undertaken by the authors. At every stage of our analysis, we have emphasized the problems encountered in applying a quantitative approach to capital investment decisions which are the responsibility of top executives of the organization. These decisions are influenced significantly by uncertainties, and attitudes toward risk, and multiple objectives. Throughout the paper we have considered the problems encountered in implementing this approach, particularly with regard to the impact on the methodology used, and the data collected and processed. Author
- Administration and Management
- Economics and Cost Analysis