The importance of a strong engineering development program to the long term profitabi1ity of an industrial organization cannot be overemphasized. Changes in products, methods, and procedures must be made at an ever increasing rate in order that the firm may remain competitive. In slow growth economic sectors such as the capital equipment industry, development programs must be accelerated to combat the effects of ever increasing inflation and overcapacity. However, the funds committed to development are generally linked to sales and grow very slowly. Therefore, engineering managers are faced with the problem of increasing development program efficiency in terms of benefit per dollar spent.One way to improve development program efficiency is to select and schedule projects in a manner which maximizes the productivity of the limited development resources. This is a special case of generalized research and development (R&D) portfolio optimization problem which has intrigued management scientists for the past, decade. They suggest that R&D programs can be optimized by solving a mathematical model of the project selection process. The real problem is, then, to choose the model which is most suitable for a particular firm or industry.