Investment in production resource flexibility: An empirical investigation of methods for planning under uncertainty

Elena Katok (), William Tarantino and Terry P. Harrison

Naval Research Logistics (NRL), 2003, vol. 50, issue 2, 105-129

Abstract: We examine several methods for evaluating resource acquisition decisions under uncertainty. Traditional methods may underestimate equipment benefit when part of this benefit comes from decision flexibility. We develop a new, practical method for resource planning under uncertainty, and show that this approach is more accurate than several commonly used methods. We successfully applied our approach to an investment problem faced by a major firm in the aviation information industry. Our recommendations were accepted and resulted in estimated annual savings in excess of $1 million (US). © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2003

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navres:v:50:y:2003:i:2:p:105-129

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