Abstract This article discusses two linear programming models used in capital budgeting. Many real-world optimization problems have the property that optimal decisions must be stated in terms of integers or whole numbers. This is the case, for example, in capital budgeting models where the integer 0 means that one does not undertake a project and the integer 1 indicates that one does. A model for many such problems is that of integer programming. The two models include a linear programming model without integer restrictions and the other the same linear programming model but with integer restrictions on the decision variables. The former, which is an approximation, is referred as the LP model, and the latter is referred as the IP model. There is no way to round an LP optimal solution to get an optimal solution to the IP model.

Reviews the book "Planning Production, Inventories, and Work Force," by C.C. Holt, F. Modigliani, J.F. Muth and H.A.Simon.