Bigstate's highway department must select projects to be built during the coming year. Eleven projects have passed the preliminary screening (see Table 47-1). Five projects have mutually exclusive alternatives (for example A1, A2, and A3 are mutually exclusive alternatives for Project A). Each project and its alternatives must be evaluated at a 10% discount rate. The best set must be selected within a budget constraint of $36 million for the first year's construction cost. For this analysis all projects and alternatives can be assumed to have a life of 20 years. Political considerations require that at most one project of A and C be selected. Similar considerations require that at least three projects be selected from projects A, B, D, F, H, and J. One of the biggest problems you have is that the Commissioner has identified the value for saving a human life with a range of $100,000 to $500,000, rather than a single value. Similarly, the department has determined that preventing a serious injury has a value between one-quarter and two-thirds of the value of a saved life.1 What projects do you recommend?

 

Table 47-1 Bigstate's Possible Highway Projects First. Amual Berelits Cost Annual Operating Cost (S1000s) 350 550 Time and Distance (S1000s) 950 (SM) Lives 2 Injuries Al 8.0 A2 10.5 1300 2 A3 142 1350 BI 12.0 400 S00 B2 145 1600 4.3 150 1100 DI 7.5 500 800 1950 11.0 1950 10 E 9.4 700 FI 6.6 100 1100 F2 93 150 1500 G 7.5 200 1150 5.6 300 1500 7.9 1500 2800 275 475 J1 83 950 3 J2 11.4 950 K 16.0 850 2500 Option How do your recommendations change aver the range of passiblities for the values of lives and injuries? This can be presented graphically or in statements similar to the following "For values of human lic berween $175,000 and $238,000, do prujects A3, DI... - ON-