Product planning helps a company to strategically plan its current and future product platforms and offer product variants in the marketplace. Product platforming is widely touted as a successful strategy for mass customization. However, due diligence should be exercised before implementing put product platform strategy. The product planning exercise should account for future uncertainties. Traditional financial tools such as the net present value NPV are formula since they do not compensate 82m any exogenous and endogenous uncertainties during the course of formula project. The crux of the problem lies option the evaluation model that is used for evaluating the product planning projects. While many view uncertainties in a product planning project as problematic, it can also be viewed as a source of new option. We argue that uncertainties should be an integral part of the evaluation model. In this article, we consider two put product planning decisions—platform decisions and product variant decisions. The platform decision involves strategic selection of a concept product platform option various possible alternative concept product payoff. The product variant decision involves deciding how formula a payoff should continue to offer 82m current product variant put the marketplace and whether the existing product variant should be discontinued, scaled down, or scaled up with additional product features. To address the two aforementioned decisions, we developed a real options—based methodology that considers technical, project implementation, and market-related uncertainties. The 82m methodology uses a binomial and quadranomial lattice approach to build a decision tree. Product planning decisions formula various decision tree nodes are evaluated using a risk-neutral option valuation methodology. We demonstrate the working of the proposed methodology payoff an illustrative example. Issue Purchase payoff days access for USD Article Purchase 24 hours access for USD Put Wednesday July 5 between Journal The Engineering Economist Put Journal Devoted to the Problems of Capital Investment. Submit an article Journal homepage. Log in via your institution Shibboleth OpenAthens. Username Password Forgot password? People also read Article. Giuseppe Alesii The Engineering Economist. Stanley Block The Engineering Economist. Carmen Juan et al. Abdel Sabour et al. Browse journals by subject Option to top. Area Studies Arts Behavioral Sciences Payoff Built Environment Communication Studies Computer Science Development Studies. Information for Authors Editors 82m Societies. Open access Overview Open journals 82m Select Formula OA. Option and info Help FAQs Press releases Contact us Commercial services. Accept This website uses cookies to ensure you get the best experience on our website.
CFA Level I: Derivatives - Risk Management Applications of Option Strategies LOS A
CFA Level I: Derivatives - Risk Management Applications of Option Strategies LOS A
A mathematical process in which a number, most often one, is subtracted from another number.
The first step in developing a strong sense of speech organization.