An exact method for scheduling of the alternative technologies in R&D projects

A fundamental challenge associated with research or new product development projects is identifying that innovative activity that will deliver success. In such projects, it is typically the case that innovative breakthroughs can be achieved by any of several possible alternative technologies, some of which may fail due to the technological risks involved. In some cases, the project payoff is obtained as soon as any single technology is completed successfully. We refer to such a project as alternative-technologies project and in this paper we consider the alternative-technologies project scheduling problem. We examine how to schedule alternative R&D activities in order to maximize the expected net present value, when each technology has a cost and a probability of failure. Although a branch-and-bound algorithm has been presented for this problem in the literature, we reformulate the problem and develop a new and improved branch-and-bound algorithm. We show using computational results that the new algorithm is much more efficient and outperforms the previous one.