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| Author: | Bengtsson, J. Olhager, J. |
| Title: | The impact of the product mix on the value of flexibility |
| Journal: | Omega
2002 : AUG, VOL. 30:4, p. 265-273 |
| Index terms: | CAPITAL BUDGETING FLEXIBLE MANUFACTURING SYSTEMS OPTIONS OUTPUT |
| Language: | eng |
| Abstract: | Product-mix flexibility is one of the major types of manufacturing flexibility, referring to the ability to produce a broad range of products or variants with presumed low changeover costs. The value of such a capability is important to establish for an industrial firm in order to ensure that the flexibility provided will be at the right level and used profitably rather than in excess of market requirements and consequently costly. The authors use option-pricing theory to analyse the impact of various product-mix issues on the value of flexibility. The real options model the authors use incorporates multiple products, capacity constraints as well as set-up costs. The issues treated here include the number of products, and demand variability. |
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