Minimizing Net Interest Cost in Municipal Bond Bidding

The problem of minimizing net interest cost (NIC) on new issues of tax-exempt debt securities is formulated as an integer linear programming problem. The formulation (for one variant) is a p-median problem with one additional constraint.

Other variants are also closely related to the p-median problem. A dual ascent procedure for solving this problem class is presented and is incorporated in a branch and bound algorithm. Computational results are presented for a number of real world problems.