Programming Investment in the Process Industries
An Approach to Sectoral Planning
The purpose of this book is to describe a programming approach to investment planning in the process industries. Investment planners have recognized the value of project analysis in decision making for some time. The extent of this analysis, however, has frequently been limited to an evaluation of the cost and rate of return on a single project independent of the others. Analysts have been unable to take into account the effects of complementary or competing projects because the number of possible combinations of projects made calculation too long and involved. Programming Investment in the Process Industries attempts to meet this need by constructing a mathematical programming model that can be used to evaluate various combinations of investment alternatives and different schedules over time. The model is a means of setting down all the calculations so that they can be performed by computer.
Professor Kendrick begins by constructing a linear programming model that describes the industry as it exists at the time the investor is making his decisions. This model includes estimates of each product's requirements in all market areas, plant capacities, production costs at each facility, the cost of transporting the products from the plants to the market areas, and other factors. To accommodate the projection of profitable future investment, the model is then converted to a multiperiod model and revised to include investment decision variables. In the final section of the book, Professor Kendrick illustrates the operation of his system by describing in detail the application of his model to an investment planning problem in the Brazilian steel industry. The last chapter of the book includes a brief discussion of the use of time-sharing systems for solving this class of investment problems.
Programming Investment in the Process Industries describes one of the new and useful tools places at the disposal of the economist and the economic planner by the appearance of the electronic computer. It will be welcome reading for economists and students of economic planning as well as for engineers and businessmen in the process industries. The possibilities suggested by a computer planning system stretch far beyond the process industries alone, making this book a valuable text for members of other industrial concerns and for development planners working with the growth of developing national economies.