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Building Real Options into Physical Systems with Stochastic Mixed-Integer Programming
(Massachusetts Institute of Technology. Engineering Systems Division, 2005-06)
The problem of building real options into physical systems has three features:
real options are not as easily defined as financial options;
path-dependency and interdependencies among projects mean that the standard tools ...
Screening for Real Options “In” an Engineering System: A Step Towards Flexible System Development; PART I: The Use of Design Matrices to Create an End-to-End Representation of a Complex Socio-Technical System
(Massachusetts Institute of Technology. Engineering Systems Division, 2006-05)
The goal of this research is to develop an analytical framework for screening for real options “in” an engineering system. Real options is defined in the finance literature as the right, but not the obligation, to take an ...
Architecting/Designing Engineering Systems Using Real Options
(Massachusetts Institute of Technology. Engineering Systems Division, 2002-05)
Everyone concerned with engineering systems faces a common issue: How do we design systems to perform well in a constantly evolving and thus risky context? As professionals concerned with the system (rather than its ...
Management of Technology Investment Risk with Real Options-Based Design: A case study of an innovative building technology
(Massachusetts Institute of Technology. Engineering Systems Division, 2005-06)
Implementation of innovative technologies is hindered by the perceived risks of technical failure or increased first cost. However, by designing a system to include real options within its architecture and by recognizing ...
Low-Cost Airports for Low-Cost Airlines: Flexible Design to Manage the Risks
(Massachusetts Institute of Technology. Engineering Systems Division, 2007-03)
The paradigm of airport planning and design is changing fundamentally. Low-cost airlines have become significant drivers of airport planning, along with aircraft size and other technical factors. They have different ...
Multi-Airport Systems in the Era of No-Frills Airlines
(Massachusetts Institute of Technology. Engineering Systems Division, 2005-06)
The development of no-frills airlines is promoting a remarkable expansion in the number of secondary airports in major metropolitan areas. These new carriers are creating a significant alternative to the traditional ...
Value-at-Risk Analysis for Real Options in Complex Engineered Systems
(Massachusetts Institute of Technology. Engineering Systems Division, 2005-06)
This paper presents a simple but powerful Real Options Valuation methodology suitable for valuing flexibility in complex engineered systems. It is based on value-at-risk analysis and relies on a standard discounted cash ...