Information technology capital budgeting using a knapsack problem

Parag C. Pendharkar, James A. Rodger

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

In this paper, we describe an information technology capital budgeting (ITCB) problem, show that the ITCB problem can be modeled as a 0-1 knapsack optimization problem, and propose two different simulated annealing (SA) heuristic solution procedures to solve the ITCB problem. Using several simulations, we empirically compare the performance of two SA heuristic procedures with the performance of two well-known ranking methods for capital budgeting. Our results indicate that the information technology (IT) investments selected using the SA heuristics have higher after-tax profits than the IT investments selected using the two ranking methods.

Original languageEnglish (US)
Pages (from-to)333-351
Number of pages19
JournalInternational Transactions in Operational Research
Volume13
Issue number4
DOIs
StatePublished - Jul 2006

Fingerprint

Budget control
Information technology
Simulated annealing
Taxation
Profitability
Knapsack problem
Capital budgeting
Heuristics
Information technology investment
Ranking

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

Cite this

@article{34d98d305dee4cb096d7e341d358660c,
title = "Information technology capital budgeting using a knapsack problem",
abstract = "In this paper, we describe an information technology capital budgeting (ITCB) problem, show that the ITCB problem can be modeled as a 0-1 knapsack optimization problem, and propose two different simulated annealing (SA) heuristic solution procedures to solve the ITCB problem. Using several simulations, we empirically compare the performance of two SA heuristic procedures with the performance of two well-known ranking methods for capital budgeting. Our results indicate that the information technology (IT) investments selected using the SA heuristics have higher after-tax profits than the IT investments selected using the two ranking methods.",
author = "Pendharkar, {Parag C.} and Rodger, {James A.}",
year = "2006",
month = "7",
doi = "10.1111/j.1475-3995.2006.00551.x",
language = "English (US)",
volume = "13",
pages = "333--351",
journal = "International Transactions in Operational Research",
issn = "0969-6016",
publisher = "Blackwell Publishing",
number = "4",

}

Information technology capital budgeting using a knapsack problem. / Pendharkar, Parag C.; Rodger, James A.

In: International Transactions in Operational Research, Vol. 13, No. 4, 07.2006, p. 333-351.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Information technology capital budgeting using a knapsack problem

AU - Pendharkar, Parag C.

AU - Rodger, James A.

PY - 2006/7

Y1 - 2006/7

N2 - In this paper, we describe an information technology capital budgeting (ITCB) problem, show that the ITCB problem can be modeled as a 0-1 knapsack optimization problem, and propose two different simulated annealing (SA) heuristic solution procedures to solve the ITCB problem. Using several simulations, we empirically compare the performance of two SA heuristic procedures with the performance of two well-known ranking methods for capital budgeting. Our results indicate that the information technology (IT) investments selected using the SA heuristics have higher after-tax profits than the IT investments selected using the two ranking methods.

AB - In this paper, we describe an information technology capital budgeting (ITCB) problem, show that the ITCB problem can be modeled as a 0-1 knapsack optimization problem, and propose two different simulated annealing (SA) heuristic solution procedures to solve the ITCB problem. Using several simulations, we empirically compare the performance of two SA heuristic procedures with the performance of two well-known ranking methods for capital budgeting. Our results indicate that the information technology (IT) investments selected using the SA heuristics have higher after-tax profits than the IT investments selected using the two ranking methods.

UR - http://www.scopus.com/inward/record.url?scp=85015448265&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85015448265&partnerID=8YFLogxK

U2 - 10.1111/j.1475-3995.2006.00551.x

DO - 10.1111/j.1475-3995.2006.00551.x

M3 - Article

AN - SCOPUS:85015448265

VL - 13

SP - 333

EP - 351

JO - International Transactions in Operational Research

JF - International Transactions in Operational Research

SN - 0969-6016

IS - 4

ER -