Huge Capacity Planning and Resource Pricing for Pioneering Projects

David Porter

Chapter Chapter 14 in Modeling Uncertainty, 2002, pp 285-300 from Springer

Abstract: Abstract Pioneering projects are systems that are designed and operated with new, virtually untested, technologies. Thus, decisions concerning the capacity of the initial project, its expansion over time and its operations are made with uncertainty. This is particularly true for NASA’s earth orbiting Space Station. A model is constructed that describes the input-output structure of the Space Station in which cost and performance is uncertain. It is shown that when there is performance uncertainty the optimal pricing policy is not to price at expected marginal cost. The optimal capacity decisions require the use of contingent contracts prior to construction to determine the optimal expansion path.

Keywords: Marginal Cost; Spot Market; Priority Class; Contingent Contract; Vickrey Auction (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-0-306-48102-4_14

Ordering information: This item can be ordered from
http://www.springer.com/9780306481024

DOI: 10.1007/0-306-48102-2_14

Access Statistics for this chapter

More chapters in International Series in Operations Research & Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().