Allocation of Resources to Research Proposals

A model is presented for the allocation of company resources to research proposals. The approach is based upon the theory of games and focuses upon the uncertainties of contract funding and their effect on company policy. A general solution is derived for a game in which the payoff function for each proposal exhibits a diminishing return. An algorithm to obtain quick numerical solutions with a slide rule is also given. Data taken from the literature for the proposal activity of an aerospace company over a period of three years show good agreement between actual and calculated expenditures. Finally, the mini-max strategy used in two-person games is compared with policies based on other decision criteria and is shown to have a pivotal place in the planning process.