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. Capital Rationing

    The act of placing restrictions on the amount of new investments ...
  2. Rational Expectations Theory

    The rational expectations theory posits that individuals make ...
  3. Rational Choice Theory

    An economic principle that assumes that individuals always make ...
  4. Prescriptive Analytics

    Prescriptive analytics is the use of technology to help businesses ...
  5. Catalog Of Federal Domestic Assistance ...

    The Catalog Of Federal Domestic Assistance (CDA) compendium of ...
  6. Direct Purchase Program

    A direct purchase program is a method by which individuals can ...
Related Articles
  1. 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.
  2. 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.
  3. Personal Finance

    3 Simple Tips to Beat Tough Finance Interviews

    When it comes to a job interview for a finance position, learn how to answer some of the hardest interviewer finance-specific questions and scenarios.
  4. Trading

    The Power of Program Trades

    Learn how programs make up a significant portion of the volume traded each day.
  5. Investing

    Traditional Stock and Forex Brokers That Allow Crypto Trading

    Traditional U.S. brokers have been slow to add cryptocurrency trading, but new product offerings are only a matter of time.
  6. Personal Finance

    5 Tough Interview Questions And How To Answer Them

    Don't get caught unprepared when your prospective employer throws these questions at you in the interview.
  7. Financial Advisor

    Advisor Insights: Frequently Asked Questions for Members

    Answers to some of the most common questions asked by members of Advisor Insights.
  8. Trading

    Understanding Investor Behavior

    Discover how some human tendencies can play out in the market, posing the question: are we really rational?
  9. 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.
  10. Investing

    Introduction To Bonds

    Find out how this method of debt investment is used to finance various levels of government and private companies.
RELATED FAQS
  1. What is the difference between a logarithmic price scale and a linear one?

    The interpretation of a stock chart can vary among different traders depending on the type of price scale used when viewing ... Read Answer >>
Hot Definitions
  1. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  2. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  3. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  4. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  5. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  6. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
Trading Center