A NON-TRADITIONAL CAPITAL INVESTMENT CRITERIA-BASED METHOD TO OPTIMIZE A PORTFOLIO OF INVESTMENTS
DOI:
https://doi.org/10.23055/ijietap.2012.19.4.403Keywords:
Project portfolio, capital budgeting, net present value, multicriteria analysis, linear programming, decision-makingAbstract
During the capital budgeting, companies need to define a set of projects that bring profitability, perpetuity and also have a direct link with the strategic objectives. This paper presents a practical model for defining a portfolio of industrial investment during capital budgeting by making use of traditional methods of investment analysis, such as Net Present Value (NPV), and by incorporating qualitative attributes on the analysis through the multicriteria analysis method called Non-Traditional Capital Investment Criteria (Boucher and MacStravic, 1991). Optimization techniques are then used to integrate the economic and qualitative attributes under budget restrictions. The proposed model was validated in an automotive company.
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