This report discusses the problem of the allocation of resources: how should an organisation (such as MOD) invest bearing in mind the long term delay for the realization of investment strategies, and how might this apply in times of increasing budgetary constraints? After making certain simplifying assumptions, the Study Group constructed a prototype model based on the method of Optimal Control. This allows the decision maker to investigate the impact of particular investment strategies over a period of years, the impact being measured in terms of “quality” or “capability”. Interventions can be designed so that “quality” (Q) is maximized at a particular time, or so that the average quality over a given time interval is maximized. Both of these approaches are explored. This model shows reasonable behaviour when tested over a parameter set. It could be used as part of a systems approach to the defence budget as a whole, but the method itself is scalable to smaller (or larger) resourcing conundrums
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