During the course of an R and D project, it is often meaningful and possible to evaluate its status, so that this information may be used for making better financing decisions over time. In addition to the resource expenditure strategy, the manager must also decide when to terminate the project. It is shown that the project should be terminated if the current status is either too low or too high to make further expenditure worthwhile. Otherwise, for an intermediate (promising) status of the project, an aggressive investment strategy is shown to be optimal, Thus, the model unifies the problems of optimally undertaking, financing and terminating an R and D project in face of various uncertainties.
ASJC Scopus subject areas
- Statistics and Probability
- Statistics, Probability and Uncertainty