Investment, Capacity Choice and Outsourcing under Uncertainty

The Effect Of Salvage Market On Strategic Technology Choice And Capacity Investment Decision Of Firm Under Demand Uncertainty

Strategic Capacity Investment Under Uncertainty

Contrary to most of the papers in the literature of investment under uncertainty we study models that not only capture the timing, but also the size of the investment. We consider a monopoly setting as well as a duopoly setting and compare the results with the standard models in which the firms do not have the capacity choice. Our main results are the following. First, for low uncertainty value...

The Dynamics of Outsourcing and Integration∗

This paper models the choice between outsourcing and integration for a firm that faces price uncertainty in both the upstream and downstream market. The firm can outsource the production of some input at an exogenous, stochastic price or it can produce the input internally at an average cost of production that is U-shaped. Up to three different production regimes can arise: pure outsourcing, pu...

Investment and capacity choice under uncertain demand

Papers published in this report series are preliminary versions of journal articles and not for quotations. Abstract This paper extends the real options literature by discussing an investment problem, where a firm has to determine optimal investment timing and optimal capacity choice at the same time under conditions of irreversible investment expenditures and uncertainty in future demand. Afte...

Optimal flexible capacity in newsboy problem under stochastic demand and lead-time

In this paper, we consider a newsvendor who is going to invest on dedicated or flexible capacity, our goal is to find the optimal investment policy to maximize total profit while the newsvendor faces uncertainty in lead time and demand simultaneously. As highlighted in literature, demand is stochastic, while lead time is constant. However, in reality lead time uncertainty decreases newsvendor's...