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New Product Development Flexibility In A Competitive Environment, Janne Kettunen, Yael Gruksha-Cockayne, Zeger Degraeve, Bert De Reyck
New Product Development Flexibility In A Competitive Environment, Janne Kettunen, Yael Gruksha-Cockayne, Zeger Degraeve, Bert De Reyck
Research Collection Lee Kong Chian School Of Business
Managerial flexibility can have a significant impact on the value of new product development projects. We investigate how the market environment in which a firm operates influences the value and use of development flexibility. We characterize the market environment according to two dimensions, namely (i) its intensity, and (ii) its degree of innovation. We show that these two market characteristics can have a different effect on the value of flexibility. In particular, we show that more intense or innovative environments may increase or decrease the value of flexibility. For instance, we demonstrate that the option to defer a product launch …
Least Squares Approximation To Stochastic Optimization Problems, Zhichao Zheng, Karthik Natarajan, Chung-Piaw Teo
Least Squares Approximation To Stochastic Optimization Problems, Zhichao Zheng, Karthik Natarajan, Chung-Piaw Teo
Research Collection Lee Kong Chian School Of Business
This paper is motivated by the following question: How to construct good approximation for the distribution of the solution value to linear optimization problem when the objective function is random? More generally, we consider any mixed zero-one linear optimization problem, and develop an approach to approximate the distribution of its optimal value when the random objective coefficients follow a multivariate normal distribution. Linking our model to the classical Stein’s Identity, we show that the least squares normal approximation of the random optimal value can be computed by solving the persistency problem, first introduced by Bertsimas et al. (2006). We further …