Capital budgeting of R&D projects is complicated by several types of interactions. Three types of interactions are generally recognized to occur within a set of projects: benefit interactions, resource interactions, and outcome interactions. The author presents a model that accounts for the combined effect of benefit, outcome, and resource interactions within a single set of projects. The model also allows for the allocation of several different resources. A branch and bound algorithm is presented to solve the resulting nonlinear integer program with multiple quadratic constraints.>
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Robert L. Schmidt (1993) studied this question.