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A novel algorithm from IITB can help organizations pursue the right environmental projects.

Researchers at Indian Institute of Technology Bombay (IITB), Mumbai, have developed a new minimum opportunity cost targeting algorithm (MOCTA) to help organizations and institutions select the right environmental and conservation projects to pursue.

Researchers working in institutions and organizations are often inundated with project ideas to pursue. Corporations are often obliged to carry out environmental and conservation projects, as part of their corporate social responsibilities, while many NGOs and institutions also pursue such initiatives out of self-interest. Funding agencies that fund these projects, however, must be able to select the right projects to pursue based on several criteria, like benefits, applications, and overall cost of the project. One of the main factors that helps in deciding the right project to pursue is capital budgeting—the amount of money to be allocated for the project.

“To achieve the market competitiveness as well as sustainable products and processes, a firm invests in different environmental and conservation projects. Capital budgeting essentially entails the decision of funding a set of acceptable projects from a larger pool of available projects, subject to different funding constraints” remark the researchers.

To help with this process of selecting the right project to pursue, researchers at IITB have developed the novel minimum opportunity cost targeting algorithm (MOCTA). The algorithm helps to address the capital budgeting problems for selecting environmental management problems. MOCTA is based on the principles of Pinch Analysis—a sequential methodology used to minimize energy consumption in chemical processes by optimization of the systems involved. Here, partially acceptable problems are formulated as linear programming- a mathematical optimization technique. The algorithm was also used, in coordination with another technique called branch and bound, to solve problems where a project is either completely accepted or completely rejected.

The researchers went on to demonstrate the applicability of the methodology through a complex search tree, using a hypothetical example. They further demonstrated the validity of the algorithm “through case studies of selecting energy conservation projects in the Indian Paper and Pulp industry”.

MOCTA could help optimize the process of selecting the right environmental and conservation projects for organizations and institutions to pursue, by reducing the amount of time, man-hours and other resources spent in taking the decision.