What is 'Zero-One Integer Programming'

Zero-one integer programming is a mathematical method of using a series of yes (1) and no (0) answers to arrive at a solution. In the world of finance, such programming is often used to provide answers to capital rationing problems, as well as to optimize investment returns and assist in planning, production, transportation and other issues.

BREAKING DOWN 'Zero-One Integer Programming'

A simple example of how zero-one integer programming might be used in capital rationing would be in determining the number of product development projects that can be completed by a certain date or within a certain budget. For example, a number of variables for each project can be given values which ultimately result in a 1 (yes) or 0 (no) binary decision about whether or not to include the project in a budget.

Integer programming is a branch of mathematical programming or optimization, which involves creating equations to solve problems. The term "mathematical programming" is connected with the fact that the goal of solving various problems is choosing programs of action. Assigning a simple yes/no value can be a powerful way to establish a linear problem-solving framework to identify inefficiencies.

RELATED TERMS
  1. Program Trading

    Program trading uses a computer algorithms to buy and/or sell ...
  2. Mathematical Economics

    Mathematical economics is a form of economics that relies on ...
  3. IE Business School

    IE Business School is a non-profit, independent educational institution ...
  4. Rationing

    Rationing is the practice of controlling the distribution of ...
  5. Absolute Frequency

    Absolute frequency is a statistical term describing the number ...
  6. Clunker

    A clunker is a popular reference to the old vehicle traded in ...
Related Articles
  1. Trading

    NYSE Suspends Trading on Amazon, Google Over Data Glitch

    The NYSE suspended trading on five symbols, including Amazon and Google, due to a price scale coding issue.
  2. Investing

    Country ETFs are Overbought. All of Them (VNM, EWZ)

    If you're the kind of investor that likes to bet on entire economies using country-themed ETFs, now might not be the best buying opportunity for, well, anywhere.
  3. Retirement

    Retirement Programs That Help Low Income Seniors

    Plans and strategies for building a healthy and satisfying life, even if your retirement income isn't as high as you wish it could be.
  4. Personal Finance

    Do Customer Loyalty Programs Really Save You Money?

    Here is a look at what customers have to do to ensure that loyalty programs help them shop smarter.
  5. Small Business

    How a Financial Wellness Program Benefits Your Business

    Offering a financial wellness program to your small business employees can save you money in the long run.
  6. Personal Finance

    Traditional MBA or Business Graduate Degree?

    Though a Master of Business Administration (MBA) is the most popular business graduate degree, there may be other options more suited to your goals.
  7. Financial Advisor

    Should You Get A CFA, MBA Or Both?

    These certifications require time and money, but combined programs are making obtaining both designations more realistic.
  8. Personal Finance

    Financial Wellness Programs: How Employees Benefit

    More and more employees, regardless of age, career or income, are turning to their employers for help with their personal financial plans.
RELATED FAQS
  1. How do I use the rule of 72 to calculate continuous compounding?

    Find out why the rule of 72 does not accurately reflect the growth caused by continuous compounding, and which number can ... Read Answer >>
Trading Center