Optimal multinational project adjustment and selection with random parameters

Abstract

With the globalization of the economy, more and more companies have made and will continue to make project investment abroad. This paper discusses a multinational project adjustment and selection problem in which project parameters are regarded as random variables. Special cash flows and value sources brought from the new foreign projects and the adjustment of the existing foreign projects are introduced. A new risk measurement for budget exceeding is proposed and a new model is developed based on the new risk measurement. In addition, a genetic algorithm is designed for solving the problem and an example is given as an illustration. The results of the example show that the algorithm is effective for solving the proposed problem. In addition, the results show that the budget can be better used and bigger investment return in net present form can be obtained when new foreign project selection and the existing project adjustment are simultaneously considered than when only new projects are selected.

Keywords:

• project selection
• project adjustment
• multinational
• random programming
• genetic algorithm

AMS Subject Classifications:

• 90C15
• 90C90

Notes

This work was supported by National Natural Science Foundation of China [grant number 71171018] and Specialized Research Fund for the Doctoral Program of Higher Education [grant number 20130006110001].