Reference no: EM132847185

The American Safety Council must allocate its national budget for the next fiscal year. Irrevocable decisions have already been made about total funding, including an allocation of $110,000 for the prevention of automobile fatalities and the reduction of property damage. Detailed allocation decisions must still be made about the specific projects to fund to achieve program missions.

Council analysts have recommended the following projects and have estimated their expected impact on the 2 missions as follows:

You have been asked to help the council decision makers make their budget allocation (i.e., how to allocate the $110K among the recommended projects). But, you are uncertain how to handle the 2 missions. Are the decision makers more concerned with preventing fatalities or with reducing property damage? When probed the decision makers profess to value both equally.

a. You decide to formulate two LP models - one designed to maximize prevented fatalities and one designed to maximize reduced property damage.

b. What are the program funding recommendations under each? Do the differences make sense?

c. It is clear that neither captures the Council's commitment to both goals, so you push the decision makers to identify a trade-off between lives saved and property damage that would leave them indifferent. Finally, they agree to use $300,000 as the implicit dollar value of a human life saved. Formulate and solve an LP model that maximizes both reduced property damage and the dollar value of prevented fatalities.

d. Discuss how this solution differs from the earlier two. Does it capture the goals of the organization?