Abstract
As the channels to which money can be allocated become greater in number, and their interrelationships become more complex, a systematic approach to budgetary decision making becomes essential. Such an approach is developed in this paper, assuming that the program under consideration has a fixed sum of money for allocation, which is insufficient to finance all of the alternative activities under consideration. A sequential procedure, utilizing the PPBS approach, is developed to evaluate the comparative worth of interacting alternatives in the capital budgeting analysis, and to maximize their combined benefit or effectiveness. While certain mathematical techniques are incorporated in the model, the general mathematical intractibility of this problem is recognized. The need for open discussion, subjective opinion, intuitive insight and competitive bargaining are essential ingredients in the proposed systematic procedure. The mathematical formulations are designed to be an aid to the intellectual and experimental capabilities of the individuals involved in the study. Some applications of this procedure are also presented.
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