One-by-one or altogether: The advantages of pursuing alternative innovation activities

A fundamental challenge associated with research or new product development projects is identifying that innovative activity that will deliversuccess. In such projects, it is typically the case thatinnovative breakthroughs can be achieved by any of several possible alternative technologies, some of whichmay fail due to the technological risks involved. In some cases, the project payoff is obtained as soon as any singletechnology is completed successfully. We refer to such a project as an 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. We formulate the problem, develop a branch-and-bound algorithm to obtain optimal solutions and evaluate the efficiency of the algorithm using extensive computational results.

Keywords:

Project scheduling , Technology , Research and Development , Innovation