Using real options anaylysis to value reoptimization options in shifting bottleneck heuristic

Using real options anaylysis to value reoptimization options in shifting bottleneck heuristic

0.00 Avg rating0 Votes
Article ID: iaor20072870
Country: United States
Volume: 53
Issue: 4
Start Page Number: 285
End Page Number: 297
Publication Date: Jun 2006
Journal: Naval Research Logistics
Authors: ,
Keywords: finance & banking, heuristics
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.

Reviews

Required fields are marked *. Your email address will not be published.