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Capacity Reservation for Capital-Intensive Technologies

An Options Approach

  • Stefan Spinler

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 525)

Table of contents

  1. Front Matter
    Pages I-XVI
  2. Stefan Spinler
    Pages 1-3
  3. Stefan Spinler
    Pages 5-25
  4. Stefan Spinler
    Pages 27-85
  5. Stefan Spinler
    Pages 87-108
  6. Stefan Spinler
    Pages 109-124
  7. Back Matter
    Pages 125-144

About this book

Introduction

Arguably the central problem in operations research and management science (OR/MS) addressed by e-Business is better coordination of supply and de­ mand, including price discovery and reduction of transactions costs of buyer­ seller interactions. In capital-intensive industries like chemicals and steel, the out-of-pocket costs of excess capacity and the opportunity costs of underuti­ lized capacity have been important factors driving the growth of exchanges for improving demand and supply coordination through e-Business platforms. Stefan Spinler addresses in his dissertation one of the most interesting aspects of this evolution for OR/MS, the parallel development of long-term and short-term markets for capacity and output, accompanied by a range of exotic options and forwards as the basic mechanisms supporting transac­ tions. This is a fascinating research topic because it builds on the powerful framework of real options, while connecting directly to key operations deci­ sions (capacity planning, staffing, maintenance, and so forth) of the plants and technologies whose output is the focus of contracts. From the perspec­ tive of practice, the use of these contracting mechanisms, as facilitated by a new breed of B2B exchanges, represents an opportunity for further improving supply chain performance and capital asset productivity.

Keywords

B2B e-markets Long-term Contract Option of Capacity Risk-hedging Spot Market hedging valuation variable

Authors and affiliations

  • Stefan Spinler
    • 1
  1. 1.Operations and Information Management Department The Wharton SchoolUniversity of Pennsylvania Jon M. Huntsman HallPhiladelphiaUSA

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-642-19006-3
  • Copyright Information Springer-Verlag Berlin Heidelberg 2003
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Springer Book Archive
  • Print ISBN 978-3-540-00287-1
  • Online ISBN 978-3-642-19006-3
  • Series Print ISSN 0075-8442
  • Buy this book on publisher's site
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