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

Elena Katok, William Tarantino, Terry P. Harrison

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

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).

Original languageEnglish (US)
Pages (from-to)105-129
Number of pages25
JournalNaval Research Logistics
Volume50
Issue number2
DOIs
StatePublished - Mar 1 2003

All Science Journal Classification (ASJC) codes

  • Modeling and Simulation
  • Ocean Engineering
  • Management Science and Operations Research

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