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Full-Text Articles in Business
Managing Wind-Based Electricity Generation In The Presence Of Storage And Transmission Capacity, Yangfang (Helen) Zhou, Alan Scheller-Wolf, Nicola Secomandi, Stephen Smith
Managing Wind-Based Electricity Generation In The Presence Of Storage And Transmission Capacity, Yangfang (Helen) Zhou, Alan Scheller-Wolf, Nicola Secomandi, Stephen Smith
Research Collection Lee Kong Chian School Of Business
We investigate the management of a merchant wind energy farm co‐located with a grid‐level storage facility and connected to a market through a transmission line. We formulate this problem as a Markov decision process (MDP) with stochastic wind speed and electricity prices. Consistent with most deregulated electricity markets, our model allows these prices to be negative. As this feature makes it difficult to characterize any optimal policy of our MDP, we show the optimality of a stage‐ and partial‐state‐dependent‐threshold policy when prices can only be positive. We extend this structure when prices can also be negative to develop heuristic one …
Valuing Information Technology Infrastructures: A Growth Options Approach, Qizhi Dai, Robert J. Kauffman, Salvatore T. March
Valuing Information Technology Infrastructures: A Growth Options Approach, Qizhi Dai, Robert J. Kauffman, Salvatore T. March
Research Collection School Of Computing and Information Systems
Decisions to invest in information technology (IT) infrastructure are often made based on an assessment of its immediate value to the organization. However, an important source of value comes from the fact that such technologies have the potential to be leveraged in the development of future applications. From a real options perspective, IT infrastructure investments create growth options that can be exercised if and when an organization decides to develop systems to provide new or enhanced IT capabilities. We present an analytical model based on real options that shows the process by which this potential is converted into business value, …
Technology Competition And Optimal Investment Timing: A Real Options Perspective, Robert J. Kauffman, X. Li
Technology Competition And Optimal Investment Timing: A Real Options Perspective, Robert J. Kauffman, X. Li
Research Collection School Of Computing and Information Systems
Companies often choose to defer irreversible investments to maintain valuable managerial flexibility in an uncertain world. For some technology-intensive projects, technology uncertainty plays a dominant role in affecting investment timing. This article analyzes the investment timing strategy for a firm that is deciding about whether to adopt one or the other of two incompatible and competing technologies.We develop a continuous-time stochastic model that aids in the determination of optimal timing for managerial adoption within the framework of real options theory. The model captures the elements of the decision-making process in such a way so as to provide managerial guidance in …
Justifying Electronic Banking Network Expansion Using Real Option Pricing: An Empirical Illustration, Michel Benaroch, Robert J. Kauffman
Justifying Electronic Banking Network Expansion Using Real Option Pricing: An Empirical Illustration, Michel Benaroch, Robert J. Kauffman
Research Collection School Of Computing and Information Systems
The application of real options analysis to information technology investment evaluation problems recently has been proposed in the IS literature (Chalasani et al. 1997; Dos Santos 1991; Kambil et al. 1993; Kumar 1996; Taudes 1998). The research reported on in this paper illustrates the value of applying real options analysis in the context of a case study involving the deployment of point-of-sale (POS) debit services by the Yankee 24 shared electronic banking network of New England. In the course of so doing, the paper also attempts to operationalize real options analysis concepts by examining claimed strengths of this analysis approach …