Optimal exit and valuation under demand uncertainty: a real options approach

Article Abstract:

The optimal exit and valuation strategies of companies facing demand uncertainty but which have a secondary market to sell their excess goods were evaluated. Analyses showed that optimal exit helps operating sales to be less than the cost suggesting optimal production despite negative net cash flows. Increased demand uncertainty under optimal exit approach has ambiguous effects that are dependent on the output's net marginal convenience yield. Investment expenditures, however, have to be reduced if a firm fails to completely sell its output.

Production Planning & Control, Methods, Models, Production management, Production control, Supply and demand, Optimal stopping (Mathematical statistics), Value analysis (Cost control)

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Ranking of generalised multi-stage KANBAN policies

Article Abstract:

A study was conducted to examine KANBAN type batch-ordering policies within a multi-stage production-inventory system. The interpretation of the KANBAN policy is generalized through the introduction of a demand release mechanism to substitute for the order release mechanism. Results founded on the modified definition of inventory positions reinforce the results of previous studies on the ranking of Material Requirements Planning while reorder point policies are maintained.

Just in time inventory systems, Just in time systems

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