Engineering Economist

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Technical note: waiting cost models for real options.
INTRODUCTION The simplest form of real options is the deferral or delay option. The mathematics used are based on the financial call option. For that financial case, if the purchase of a stock is . . .

Electric power network decision effects.
INTRODUCTION Electric power network system design and operation calls for a large number of decisions by many decision-makers over an extended period of time. These decisions are typically made in . . .

Utilizing a value of information framework to improve ore collection and classification procedures.
INTRODUCTION Economic decision analysis models provide a robust framework for understanding complex problems and improving the quality of decision-making under uncertainty. Economic decision analy . . .

Some pitfalls in loan subsidy valuation.
The purpose of this cautionary note on Jennergren's (2005) comprehensive compendium of loan subsidy valuation methods is to emphasize the loan structure specificity of his paper. Only bond-type arra . . .

Economic analysis of electric power transmission expansion.
INTRODUCTION Deregulation has significantly changed the structure of power markets, including their operation, management, and planning processes, not only in the United States but also in other c . . .

A component replacement model for electricity distribution systems.
INTRODUCTION Many electric utilities in the United States were built in the early 1960s, and although highly reliable, the electricity infrastructure is old and aging (Brown and Willis, 2006; Li a . . .

Energy technology learning through deployment in competitive markets.
INTRODUCTION Market deployment can make currently high-cost, low-carbon energy technologies cost efficient. Recent high-level policy documents embrace the insights from experience and learning cur . . .

Short-term electric power trading strategies for portfolio optimization.
INTRODUCTION The generation business in many parts of the United States is undergoing a radical change from a regulated monopoly toward market competition. Under this new environment toward compet . . .

Operational decisions, capital structure, and managerial compensation: a news vendor perspective.
INTRODUCTION The operations management and engineering economics literature has largely ignored corporate financing decisions on the assumption that a firm's optimal inventory level or production . . .

A study on estimating investment timing of real options.
INTRODUCTION Recently, managers have addressed the uncertainty in various capital budgeting decisions by applying an options analysis to their evaluations of the project (Amram and Kulatilaka (199 . . .

Can we capture the value of option volatility?
INTRODUCTION Traditional discounted cash flow techniques use four parameters to value a project: cost, benefits, time, and the interest rate. Real options analysis adds a fifth parameter: the vola . . .

A hybrid derivative trading system based on volatility and return forecasting.
INTRODUCTION An option is a type of derivative, a financial instrument that derives its value from the value of other underlying variables (Hull 2003). In the last few decades, options have become . . .

Bias and error in mine project capital cost estimation.
INTRODUCTION Mining companies and their financiers are exposed to a variety of risks. One of the main risks, completion risk, relates to whether a project is constructed on budget and on time. Unc . . .

A simplified approach to understanding the Kalman filter technique.
INTRODUCTION Many models in economics and finance depend on data that are not observable. These unobserved data are usually in a context in which it is desirable for a model to predict future even . . .

A disputation between the authors and the reviewing editor.(Letter to the editor)
Letter to the Editor Authors Bertisen and Davis are commended for their study of mine project capital cost estimation. They rightly point out that the estimated cost when compared to the actu . . .

2007 ASEE-EED business meeting minutes.
2007 ASEE-EED BUSINESS MEETING MINUTES Present: John H. Ristroph U. of LA at Lafayette Bob Dryden Portland State U. Kate Abel Stevens Inst. of Tech. Kevin Dahm Rowan U. D . . .

Real option pricing and bounds in incomplete markets.
INTRODUCTION The real option approach in evaluating capital investment decision draws increasing attention both from industry and from academics in a recent decade. The managerial flexibility inhe . . .

A comparison of fuzzy set and probabilistic paradigms for ranking vague economic investment information using a present worth cr
INTRODUCTION In decision situations where long-run historical data are available, a traditional economic analysis often uses the relative frequency interpretation of probability to model uncertain . . .

A cost function for the natural gas transmission industry.
Among the regulatory aspects in the economic study of the pipeline industry, an important one is concerned both with the pricing policies recommended by the regulatory institutions and with the empi . . .

Probabilistic DCF analysis and capital budgeting and investment--a survey.
INTRODUCTION Deterministic discounted cash flow (DCF) analysis is well established as a financial and economic tool for evaluating an investment's feasibility and in capital budgeting. However, wr . . .

New research directions in engineering economics--modeling dependencies with copulas.
Understanding and quantifying dependencies among variables often arises in stochastic capital investment and real option analysis. In such modeling situations, Pearson product moment linear correlat . . .

Iterative multi-attribute multi-unit reverse auctions.
This article studies iterative multi-attribute auctions for multi-unit procurement. Order splitting among suppliers is allowed in auctions to improve efficiency and take advantage of suppliers' cost . . .

Symmetric and asymmetric stationarity tests of productivity.
Studies of productivity in the operations and engineering management literature have typically focused on identifying the drivers of productivity and how best to manage resources. To date, the issue . . .

Case study: applying a regional CGE model for estimation of indirect economic losses due to damaged highway bridges.(computable
Destruction from natural and man-made disasters can result in extensive damage to the affected area's infrastructure. While the destruction results in costs that are necessary to restore the physica . . .

Case study: the engineering economics of RFID in specialized manufacturing.
INTRODUCTION In order to ensure the cost-effective production of specialized products, many companies use calibrated tools. Failure to use the proper calibrated tool can result in scrap and rework . . .

Stochastic oil price models: comparison and impact.
INTRODUCTION Good decision-making practices in complex and difficult situations are crucial to the success of a firm. In oil and gas investment projects, the difference between a good decision and . . .

Are "real options" actually used in the real world?
INTRODUCTION In their highly regarded book published at the turn of this century, Copeland and Antikarov (2001) suggested that real options would dominate the capital budgeting process within the . . .

Evaluating product plans using real options.
INTRODUCTION An effective product planning strategy is critical for the success of any firm. Product planning is defined as a process that envisions which product variants should be introduced and . . .

Financial options from regulating real estate for habitat conservation.
INTRODUCTION Habitat loss is the largest threat to biodiversity (Wilcove et al., 1998). Current rates of biodiverse species extinction are estimated at several orders of magnitude above background . . .

Solving the winner determination problem in a divisible-object auction.(Author abstract)
INTRODUCTION Auctions can be used to allocate one or multiple objects to a set of winning bidders and determine the prices they pay. Depending on the auctioneer's objective, the auction goal may b . . .

Fuzzy present value analysis model for evaluating information system projects.(Author abstract)
INTRODUCTION The need for more information system projects continues to grow as we continue to witness rapid advances in information technology. The selection of the right project based on its eco . . .

A profit and loss analysis for make-to-order versus make-to-stock policy--a supply chain case study.(Author abstract)(Case study
INTRODUCTION Outsourcing non-core competency manufacturing to contract manufacturers is commonplace in today's marketplace. The study explores issues associated with a make-to-order (MTO) versus m . . .

A study on the quality-productivity relationship and its verification in manufacturing industries.(Author abstract)
INTRODUCTION For years, quality and productivity have been viewed as two important indexes of company performance, especially in manufacturing industries. However, they are always emphasized separ . . .

Taking a moment to teach engineering economy.
INTRODUCTION When students are introduced to a new topic, they usually begin with an awareness of their lack of knowledge about the topic. An effective education environment is designed to advance . . .

Compensation options in joint ventures. A real options approach.
INTRODUCTION The design of a joint venture (JV) is the result of a negotiation process. Although there is no standard negotiation, one could draft a sequence from the key economic and legal terms . . .

Characterizing the real roots for P, A, and F with applications to environmental remediation and home buying problems.
INTRODUCTION Given an interest rate, any set of cash flows has a unique present worth; but those cash flows may or may not have a unique real internal rate of return. This article completely cha . . .

Forecasting errors in capital budgeting: a multi-firm post-audit study.
INTRODUCTION The appraisal of investment projects is subject to uncertainty derived from the fact that it is based on expectations (of cash flows) rather than on observed data. To address this unc . . .

Subsidies in interdependent security with heterogeneous discount rates.
INTRODUCTION After September 11, 2001, homeland security has received a great deal of attention in the United States. Since security-related resources are always limited, maximizing security subje . . .

ASEE-EED revised bylaws.(American Society for Engineering Education)(engineering economy education)(Organization overview)
The following is the revision of the Division Bylaws, approved at the 2006 business meeting of the Engineering Economy Division of the American Society of Engineering Education. CONSTITUTION AND B . . .

2006 ASEE-EED business meeting minutes.
1. Chair Scott Grasman called the meeting to order at 12:40 p.m. on June 19, 2006 in Chicago, Illinois at the American Society of Engineering Education Annual Conference and Exposition. 2. A sign- . . .

2006 IIE-EED business meeting minutes.
The annual business meeting of the Engineering Economy Division of the Institute of Industrial Engineers was held at the IIE Annual Conference on May 21, 2006, in Orlando, Florida. ATTENDEES Joe H . . .

Engineering Economy: Applying Theory to Practice, 2nd Edition.(Book review)
Engineering Economy: Applying Theory to Practice, 2nd Edition By Ted G. Eschenbach, Oxford University Press, 2003 The subject of this review is the second edition textbook offered by Dr. Ted G. Es . . .

Corporate Investment Decisions and Economic Analysis, Exercises and Case Studies.(Book review)
Corporate Investment Decisions and Economic Analysis, Exercises and Case Studies By Denis Babusiaux and Axel Pierru IFP Publications/Editions Technip, Paris, 2005 This volume by Drs. Denis Babusia . . .

Engineering Economy, 13th Edition.(Book review)
Engineering Economy, 13th Edition By William G. Sullivan, Elin M. Wicks, James T. Luxhoj, Pearson Education, Inc. 2006 With such a competitive selection of engineering economy textbooks available . . .

Economics of engineering: a new fabric from some old threads.
INTRODUCTION Present value (present worth) is a widely used measure for comparing the economic value of alternatives. The investigation presented here is focused on the definition of present value . . .

Electronic resource management: a multi-period capital budgeting approach.
INTRODUCTION As the costs for acquisitions have been rising consistently faster than the increases in budgets, academic libraries are struggling to financially manage their subscriptions of electr . . .

The economic impact of obesity on automobile fuel consumption.
INTRODUCTION Obesity has become an important public health issue in the United States. Since the early 1960s, the average adult weight has increased by more than 24 pounds (U.S. DHHS, 2004). In 20 . . .

Loan subsidy valuation: an alternative approach.
INTRODUCTION In a recent paper, Jennergren (2005) analyzed four loan subsidy valuation methods suggested in authoritative textbooks. He showed that the first three can be derived from the applicat . . .

The economic benefits of green buildings: a comprehensive case study.
INTRODUCTION In building design and construction, both green building and standard construction techniques are considered for many new building projects. Final decisions are routinely made based s . . .

Payback period and internal rate of return in real options analysis.
INTRODUCTION Real options are a side product of financial options models. As a consequence, they focus on project value, i.e., expected expanded NPV, E([NPV.sub.e]), and neglect other dimensions o . . .