If sufficient money is available to invest on the acceptable mutually exclusive alternatives of all projects, all such acceptable proposals could, of course, be undertaken for implementation, i.e. all independent "best-alternative" investment proposals each yielding return (individually) greater than a pre-determined level can be undertaken. However, in real world situations, the capital budget is often limited; and each of these acceptable proposals competes for these limited funds. Then the firm must "ration" the proposals by its own criterion. Generally, the criterion is that the firm allocates funds within (acceptable) projects in such a way as to maximise the long-term returns. (Linear programing formulation is, of course, the best solution methodology in these cases. However, other intuitive or search methods can also be equally effective. Projects are ranked with reference to a chosen criterion, may be, by net present worth (or internal rate or return) in the descending order of profitability. The available funds are then appropriately allocated amongst the ranked projects, considering the rank mainly, but also having an eye to utilise most of the available funds (as an added criterion.)
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