Selection Of Mining Machinery Based On Mechanical Delay Statistics: An Application Of Goal Programming To Capital Budgeting

An application of goal programming (GP) in evaluation of proposed purchases of major mining machinery is presented. It incorporates historical operating data compiled on mechanical delays to production time. The goal programming technique, which is an extension of integer programming, is used to maximize an objective function. The objective function combines the capital budgeting evaluation methods of net present value, payback period, profitability index, and total net earnings as goals weighted according to a management preference. The GP method gives an optimal solution to a multiple-goal problem. A sensitivity analysis is performed to determine the effect of an increased production forecast or a tightened budget on proposal selection.