M.Sc Thesis

M.Sc StudentMund Inbal
SubjectAllocating Resources to R&D Projects in a Competitive
DepartmentDepartment of Industrial Engineering and Management
Supervisors PROF. Boaz Golany
PROF. Uriel Rothblum (Deceased)
Full Thesis textFull thesis text - English Version


Firms that develop and produce technology-intensive products and processes are often in a race against competitors to become the first to achieve a certain level of technology. These firms are faced with dilemmas in selecting the Research and Development projects they wish to invest in and the level of investment in each one of the selected projects. Due to the considerable uncertainty concerning the success of different potential projects, the motivation becomes to develop resources allocation methodologies that would yield optimal or near optimal selection and investment decisions. We analyze the allocation problem of a firm wishing to allocate its resources among Research and Development projects, so as to maximize the expected discounted utility with or without budget constraint.

We consider a model in which m possible firms compete on the completion of n possible Research and Development projects. The model will be used to analyze aspects of cooperative settings where a single decision-maker decides simultaneously which projects are worthy as candidates for investment and which firms will do them so as to maximize the total benefit for all of the firms that participate in the Research and Development race. In contrast, we will also analyze the firms' behavior using the Nash equilibrium solution which considers agents‘ individual goals. Our main tool will be first order conditions and we shall explore existence and uniqueness of the solution.