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A network option portfolio management framework for adaptive transportation planning

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  • Chow, Joseph Y.J.
  • Regan, Amelia C.
  • Ranaiefar, Fatemeh
  • Arkhipov, Dmitri I.

Abstract

A real option portfolio management framework is proposed to make use of an adaptive network design problem developed using stochastic dynamic programming methodologies. The framework is extended from Smit's and Trigeorgis' option portfolio framework to incorporate network synergies. The adaptive planning framework is defined and tested on a case study with time series origin-destination demand data. Historically, OD time series data is costly to obtain, and there has not been much need for it because most transportation models use a single time-invariant estimate based on deterministic forecasting of demand. Despite the high cost and institutional barriers of obtaining abundant OD time series data, we illustrate how having higher fidelity data along with an adaptive planning framework can result in a number of improved management strategies. An insertion heuristic is adopted to run the lower bound adaptive network design problem for a coarse Iran network with 834 nodes, 1121 links, and 10Â years of time series data for 71,795 OD pairs.

Suggested Citation

  • Chow, Joseph Y.J. & Regan, Amelia C. & Ranaiefar, Fatemeh & Arkhipov, Dmitri I., 2011. "A network option portfolio management framework for adaptive transportation planning," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 765-778, October.
    • Handle: RePEc:eee:transa:v:45:y:2011:i:8:p:765-778
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    6. Joseph Y. J. Chow & Hamid R. Sayarshad, 2016. "Reference Policies for Non-myopic Sequential Network Design and Timing Problems," Networks and Spatial Economics, Springer, vol. 16(4), pages 1183-1209, December.
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    8. Dezhi Zhang & Jiehui Jiang & Shuangyan Li & Xiamiao Li & Qingwen Zhan, 2017. "Optimal Investment Timing and Size of a Logistics Park: A Real Options Perspective," Complexity, Hindawi, vol. 2017, pages 1-12, December.

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