| Article ID: | iaor20102887 |
| Volume: | 36 |
| Issue: | 5 |
| Start Page Number: | 633 |
| End Page Number: | 636 |
| Publication Date: | Sep 2008 |
| Journal: | Operations Research Letters |
| Authors: | Navas Jorge, Marn-Solano Jess |
| Keywords: | capacity planning |
In this paper, the expression for the cost of capital is derived when capacity expansion investments and replacement investments exhibit differences in their effective prices. It is shown that the cost of capital derived by perturbing the optimal stock path should be constructed under an opportunity cost criterion.