Question
NorthBancTec Inc. was a high-end boutique IT firm. Headquartered in Washington, D.C., NorthBancTec had three teams: in Georgetown (United States), in Dubai (United Arab Emirates),
NorthBancTec Inc. was a high-end boutique IT firm. Headquartered in Washington, D.C., NorthBancTec had three teams: in Georgetown (United States), in Dubai (United Arab Emirates), and in Novosibirsk (Russia).
Because of its small size, NorthBancTec had to be very selective in choosing R&D projects. Table 1 lists the possibilities it had identified for the upcoming year.
Table 1. Possible projects, their type, and their projected net benefit.
Project | Type of Project | Projected Net Benefit (in thousands of dollars) |
---|---|---|
HR Processes 1 | New product | 2,000 |
HR Processes 2 | Improvements and modifications | 3,000 |
Telecom Interface 1 | New product | 1,500 |
Telecom Interface 2 | New product | 1,000 |
Telecom Interface 3 | Improvements and modifications | 2,500 |
Data Center | New product | 1,800 |
Accounting System 1 | New product | 2,500 |
Accounting system 2 | Improvements and modifications | 5,000 |
Gov't Services 1 | New product | 6,000 |
Gov't Services 2 | New product | 3,000 |
NorthBancTec would not engage in more than two telecom projects or more than one accounting project per year. Management had also decided that one of the HR projects must be undertaken, but not both. Each project (except the data center) required at least two teams to work on it. The Georgetown team had a total of 60 days available to spend on R&D; the Dubai and Novosibirsk teams each had 40. Table 2 summarizes the time requirement for each project and team.
Table 2. Time requirements for each project and team.(1)
Project | Georgetown | Dubai | Novosibirsk |
---|---|---|---|
HR Process 1 | 30 | 40 | X2 |
HR Process 2 | 16 | 24 | X |
Telecom interface 1 | 24 | X | 30 |
Telecom interface 2 | 20 | X | 24 |
Telecom interface 3 | 10 | X | 16 |
Data Center | X | X | 14 |
Accounting System 1 | X | 24 | 26 |
Accounting System 2 | X | 28 | 30 |
Gov't System 1 | 40 | 34 | 30 |
Gov't System 2 | X | 50 | 36 |
(1) Any two of the three teams could be used for the Government services 1 project.
(2) An X indicates the corresponding team could not be used on the project.
We need to determine the objective function, constraints and model it in excel and answer the following questions:
1. What is the optimal project selection? What is the projected profit (benefit) associated with the optimal project selection?
2. If the company aims to save any of the three teams 10 days of work so they can spend those additional days on the R&D projects, which team they should focus on? Briefly explain.
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