Quantitative Analysis for Management, 13/e

10.2 Modeling with 0–1 (Binary) Variables

In this section, we demonstrate how 0–1 decision variables can be used to model several diverse situations. Typically, a 0–1 decision variable is assigned a value of 0 if a certain condition is not met and 1 if the condition is met. Another name for a 0–1 decision variable is a binary variable. A common problem of this type, the assignment problem, involves deciding which individuals to assign to a set of jobs. (This is discussed in Chapter 9.) In this assignment problem, a value of 1 indicates a person is assigned to a specific job, and a value of 0 indicates the assignment was not made. We present other types of 0–1 problems to show the wide applicability of this modeling technique.

Capital Budgeting ...