Using real options analysis to value reoptimization options in the shifting bottleneck heuristic

Thomas G. Yeung and Scott J. Mason

Naval Research Logistics (NRL), 2006, vol. 53, issue 4, 285-297

Abstract: The reoptimization procedure within the shifting bottleneck (SB) involves reevaluation of all previously scheduled toolgroup subproblems at each iteration of the SB heuristic. A real options analysis (ROA) model is developed to value the option to reoptimize in the SB heuristic, such that reoptimization only occurs when it is most likely to lead to a schedule with a lower objective function. To date, all ROA models have sought to value options financially (i.e., in terms of monetary value). The ROA model developed in this paper is completely original in that it has absolutely no monetary basis. The ROA methodologies presented are shown to greatly outperform both full and no reoptimization approaches with respect to both computation time and total weighted tardiness. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/nav.20144

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:wly:navres:v:53:y:2006:i:4:p:285-297

Access Statistics for this article

More articles in Naval Research Logistics (NRL) from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().