We study the optimal production-inventory-outsourcing policy for a firm with Markovian in-house production capacity that faces independent stochastic demand and has the option to outsource. We find very simple optimal policy forms under fairly reasonable assumptions. In addition, when the capacity Markov process is stochastically monotone, the policy parameters decrease in the firm’s current ca...

We investigate whether Swedish Environmental Protection Agency (EPA) administrator recommendations regarding improvements in environmental quality differ from citizen preferences. The scope and significance of the possible difference are assessed by conducting identical choice experiments on a random sample of Swedish citizens and a random sample of administrators working at the Swedish EPA. Th...

Real option analysis (ROA) is a way of valuing real assets by invoking option pricing theory. In contrast to the traditional net present value approach, ROA makes it possible to explicitly incorporating management flexibility. Because of such advantages, ROA has become an important tool for project valuation and is widely used in practice. In this paper, we develop a real option model with regi...

The Chinese economy showed the sign of overheating in the spring of 1993. As a countermeasure of overheating, the Chinese government began to implement a retrenchment program in July 1993 and the program lasted until 1997. The economic growth rate did not drop sharply because the program resulted in a soft-landing. The economic growth rate began a gradual slowdown in 1995 but has been maintaine...

Several researchers have proposed modeling temporally abstract actions in reinforcement learning by the combination of a policy and a termination condition, which we refer to as an ”option”. Value functions over options and models of options can be learned using methods designed for semi-Markov decision processes (SMDPs). However, these methods all require an option to be executed to terminatio...

In this article, we model money-back guarantees (MBGs) as put options. This use of option theory provides retailers with a framework to optimize the price and the return option independently and under various market conditions. This separation of product price and option value enables retailers to offer an unbundled MBG policy, that is, to allow the customer to choose whether to purchase an MBG...

Literature regarding the post-Soviet period has commented extensively on the difficulties of post-Soviet governments in extricating themselves from command economies and centralised polities and moving toward market economies and democratic government. For the most part, such writing has emphasised the economic variable. Essentially, the argument has concentrated on a consensus that the post-So...

The consistency and predictability of regulation is thought to be highly important for costly investment decisions. When the government lacks commitment power to maintain a promised policy, and firms are not perfectly competitive, investment levels are typically lower than when the government can commit. However, flexibility in policymaking is beneficial in that it allows for adjustment when co...

the first step in policy making is describing the objectives and choosing the policy instruments and management strategies and then, analyzing and assessing the impacts of them. in this study, farmers’ responses to selected policy instruments and management strategies were assessed using a semi-distributed planning model in qazvin irrigation and drainage network. the proposed model, simulates t...