Valuing the flexibility of flexible manufacturing systems with fast decision rules
We compare the use of stochastic dynamic programming (SDP), Neural Networks and a simple approximation rule for calculating the real option value of a flexible production system. While SDP yields the best solution to the problem, it is computationally prohibitive for larger settings. We test two app...
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| creator | Feurstein, Markus Natter, Martin |
| description | We compare the use of stochastic dynamic programming (SDP), Neural Networks and a simple approximation rule for calculating the real option value of a flexible production system. While SDP yields the best solution to the problem, it is computationally prohibitive for larger settings. We test two approximations of the value function and show that the results are comparable to those obtained via SDP. These methods have the advantage of a high computational performance and of no restrictions on the type of process used. Our approach is not only useful for supporting large investment decisions, but it can also be applied in the case of routine decisions like the determination of the production program when stochastic profit margins occur. |
| doi_str_mv | 10.1007/3-540-64574-8_401 |
| format | Conference Proceeding |
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While SDP yields the best solution to the problem, it is computationally prohibitive for larger settings. We test two approximations of the value function and show that the results are comparable to those obtained via SDP. These methods have the advantage of a high computational performance and of no restrictions on the type of process used. Our approach is not only useful for supporting large investment decisions, but it can also be applied in the case of routine decisions like the determination of the production program when stochastic profit margins occur.</description><subject>Applied sciences</subject><subject>Capital Budgeting</subject><subject>Computer science; control theory; systems</subject><subject>Control theory. Systems</subject><subject>Dynamic Programming</subject><subject>Exact sciences and technology</subject><subject>Flexible Manufacturing Systems</subject><subject>Neural Networks</subject><subject>Process control. Computer integrated manufacturing</subject><subject>Real Options</subject><subject>Simulated Annealing</subject><issn>0302-9743</issn><issn>1611-3349</issn><isbn>3540645748</isbn><isbn>9783540645740</isbn><isbn>9783540693505</isbn><isbn>3540693505</isbn><fulltext>true</fulltext><rsrctype>conference_proceeding</rsrctype><creationdate>2005</creationdate><recordtype>conference_proceeding</recordtype><recordid>eNotkMtOwzAQRc1LopR-ADsv2IaO4_cSVbykSkgI2FqOY1NDmkRxIujfk7SdzWhmjkZXB6EbAncEQC5pxhlkgnHJMmUYkBO00FLRcSs05cBP0YwIQjJKmT5DV_vDRKtzNAMKeaYlo5dokdI3jEVzSXIxQ2-fthpi_YX7jceh8n-xiFXsd7gJx7HyeGvrIVjXD91Epl3q_Tbh39hvcLCpx6V3McWmxt1Q-XSNLoKtkl8c-xx9PD68r56z9evTy-p-nbWEapJpIsFzrhkpioIXqiQ6yFJyH5xgEhwJJQ-CSigUFU44bXUJToDyjmupKZ2j28Pf1iZnq9DZeoxh2i5ubbczOTAGSo3Y8oCldorvO1M0zU8yBMxk1lAzqjJ7V2Zvlv4D15NnJw</recordid><startdate>20050729</startdate><enddate>20050729</enddate><creator>Feurstein, Markus</creator><creator>Natter, Martin</creator><general>Springer Berlin Heidelberg</general><general>Springer</general><scope>IQODW</scope></search><sort><creationdate>20050729</creationdate><title>Valuing the flexibility of flexible manufacturing systems with fast decision rules</title><author>Feurstein, Markus ; Natter, Martin</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-p1391-9170e55941bbb5b8d19f7d75efc6470c1fd5f6370b836c6c9a9d0c608ec597933</frbrgroupid><rsrctype>conference_proceedings</rsrctype><prefilter>conference_proceedings</prefilter><language>eng</language><creationdate>2005</creationdate><topic>Applied sciences</topic><topic>Capital Budgeting</topic><topic>Computer science; control theory; systems</topic><topic>Control theory. Systems</topic><topic>Dynamic Programming</topic><topic>Exact sciences and technology</topic><topic>Flexible Manufacturing Systems</topic><topic>Neural Networks</topic><topic>Process control. Computer integrated manufacturing</topic><topic>Real Options</topic><topic>Simulated Annealing</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Feurstein, Markus</creatorcontrib><creatorcontrib>Natter, Martin</creatorcontrib><collection>Pascal-Francis</collection></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Feurstein, Markus</au><au>Natter, Martin</au><au>Mira, José</au><au>Ali, Moonis</au><au>Pasqual del Pobil, Angel</au><format>book</format><genre>proceeding</genre><ristype>CONF</ristype><atitle>Valuing the flexibility of flexible manufacturing systems with fast decision rules</atitle><btitle>Lecture notes in computer science</btitle><date>2005-07-29</date><risdate>2005</risdate><spage>153</spage><epage>162</epage><pages>153-162</pages><issn>0302-9743</issn><eissn>1611-3349</eissn><isbn>3540645748</isbn><isbn>9783540645740</isbn><eisbn>9783540693505</eisbn><eisbn>3540693505</eisbn><abstract>We compare the use of stochastic dynamic programming (SDP), Neural Networks and a simple approximation rule for calculating the real option value of a flexible production system. While SDP yields the best solution to the problem, it is computationally prohibitive for larger settings. We test two approximations of the value function and show that the results are comparable to those obtained via SDP. These methods have the advantage of a high computational performance and of no restrictions on the type of process used. Our approach is not only useful for supporting large investment decisions, but it can also be applied in the case of routine decisions like the determination of the production program when stochastic profit margins occur.</abstract><cop>Berlin, Heidelberg</cop><pub>Springer Berlin Heidelberg</pub><doi>10.1007/3-540-64574-8_401</doi><tpages>10</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0302-9743 |
| ispartof | Lecture notes in computer science, 2005, p.153-162 |
| issn | 0302-9743 1611-3349 |
| language | eng |
| recordid | cdi_pascalfrancis_primary_2044088 |
| source | Springer Books |
| subjects | Applied sciences Capital Budgeting Computer science control theory systems Control theory. Systems Dynamic Programming Exact sciences and technology Flexible Manufacturing Systems Neural Networks Process control. Computer integrated manufacturing Real Options Simulated Annealing |
| title | Valuing the flexibility of flexible manufacturing systems with fast decision rules |
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