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Article: An approach to the valuation and decision of ERP investment projects based on real options

TitleAn approach to the valuation and decision of ERP investment projects based on real options
Authors
KeywordsDecision-making
Enterprise resources planning (ERP)
Mixed-integer programming
Real option
Uncertainty
Issue Date2009
PublisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0254-5330
Citation
Annals Of Operations Research, 2009, v. 168 n. 1, p. 181-203 How to Cite?
AbstractThe risks and uncertainties inherent in most enterprise resources planning (ERP) investment projects are vast. Decision making in multistage ERP projects investment is also complex, due mainly to the uncertainties involved and the various managerial and/or physical constraints to be enforced. This paper tackles the problem using a real-option analysis framework, and applies multistage stochastic integer programming in formulating an analytical model whose solution will yield optimum or near-optimum investment decisions for ERP projects. Traditionally, such decision problems were tackled using lattice simulation or finite difference methods to compute the value of simple real options. However, these approaches are incapable of dealing with the more complex compound real options, and their use is thus limited to simple real-option analysis. Multistage stochastic integer programming is particularly suitable for sequential decision making under uncertainty, and is used in this paper and to find near-optimal strategies for complex decision problems. Compared with the traditional approaches, multistage stochastic integer programming is a much more powerful tool in evaluating such compound real options. This paper describes the proposed real-option analysis model and uses an example case study to demonstrate the effectiveness of the proposed approach. © 2008 Springer Science+Business Media, LLC.
Persistent Identifierhttp://hdl.handle.net/10722/74521
ISSN
2014 Impact Factor: 1.217
2014 SCImago Journal Rankings: 1.115
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorWu, Fen_HK
dc.contributor.authorLi, HZen_HK
dc.contributor.authorChu, LKen_HK
dc.contributor.authorSculli, Den_HK
dc.contributor.authorGao, Ken_HK
dc.date.accessioned2010-09-06T07:02:08Z-
dc.date.available2010-09-06T07:02:08Z-
dc.date.issued2009en_HK
dc.identifier.citationAnnals Of Operations Research, 2009, v. 168 n. 1, p. 181-203en_HK
dc.identifier.issn0254-5330en_HK
dc.identifier.urihttp://hdl.handle.net/10722/74521-
dc.description.abstractThe risks and uncertainties inherent in most enterprise resources planning (ERP) investment projects are vast. Decision making in multistage ERP projects investment is also complex, due mainly to the uncertainties involved and the various managerial and/or physical constraints to be enforced. This paper tackles the problem using a real-option analysis framework, and applies multistage stochastic integer programming in formulating an analytical model whose solution will yield optimum or near-optimum investment decisions for ERP projects. Traditionally, such decision problems were tackled using lattice simulation or finite difference methods to compute the value of simple real options. However, these approaches are incapable of dealing with the more complex compound real options, and their use is thus limited to simple real-option analysis. Multistage stochastic integer programming is particularly suitable for sequential decision making under uncertainty, and is used in this paper and to find near-optimal strategies for complex decision problems. Compared with the traditional approaches, multistage stochastic integer programming is a much more powerful tool in evaluating such compound real options. This paper describes the proposed real-option analysis model and uses an example case study to demonstrate the effectiveness of the proposed approach. © 2008 Springer Science+Business Media, LLC.en_HK
dc.languageengen_HK
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0254-5330en_HK
dc.relation.ispartofAnnals of Operations Researchen_HK
dc.subjectDecision-makingen_HK
dc.subjectEnterprise resources planning (ERP)en_HK
dc.subjectMixed-integer programmingen_HK
dc.subjectReal optionen_HK
dc.subjectUncertaintyen_HK
dc.titleAn approach to the valuation and decision of ERP investment projects based on real optionsen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0254-5330&volume=168&spage=181&epage=203&date=2008&atitle=An+approach+to+the+valuation+and+decision+of+ERP+investment+projects+based+on+real+optionsen_HK
dc.identifier.emailChu, LK:lkchu@hkucc.hku.hken_HK
dc.identifier.authorityChu, LK=rp00113en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1007/s10479-008-0365-7en_HK
dc.identifier.scopuseid_2-s2.0-62949170084en_HK
dc.identifier.hkuros150745en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-62949170084&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume168en_HK
dc.identifier.issue1en_HK
dc.identifier.spage181en_HK
dc.identifier.epage203en_HK
dc.identifier.eissn1572-9338-
dc.identifier.isiWOS:000264317000011-
dc.publisher.placeUnited Statesen_HK
dc.identifier.scopusauthoridWu, F=53867635000en_HK
dc.identifier.scopusauthoridLi, HZ=8575711600en_HK
dc.identifier.scopusauthoridChu, LK=7202233520en_HK
dc.identifier.scopusauthoridSculli, D=7003917046en_HK
dc.identifier.scopusauthoridGao, K=24337878500en_HK

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