Journal
INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH
Volume 52, Issue 12, Pages 3725-3743Publisher
TAYLOR & FRANCIS LTD
DOI: 10.1080/00207543.2014.883473
Keywords
project scheduling; real option; binary fuzzy goal programming; supply chain management
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Funding
- Kuehne Foundation, Switzerland
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Supply chain departments spend their time managing numerous projects that will improve and maintain their supply chains. Recent literature has most frequently described the content of these projects and their scheduling but neglected to include risk and uncertainty in the expected cost, profits and time durations of these projects. In this article, we have introduced real option valuation (ROV) to supply chain project scheduling as a flexible method to quantify those risks. Our proposed two-step framework links ROV to all relevant constraints of a multi-project set-up by binary fuzzy goal programming. We applied the framework to a real-life case study data of 21 projects that were facing numerous risks and resource constraints. The results show how scheduling performance improved in comparison to methods ignoring risk and uncertainty (e.g. net present value-based scheduling). For validation we conducted hypothesis tests and sensitivity analysis, and provide an in-depth discussion. The findings contribute to research and practice by capturing project-related risks and managerial flexibilities in general and in supply chains in particular.
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