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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.
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 45 (2011)
    Issue (Month): 8 (October)
    Pages: 765-778

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    Handle: RePEc:eee:transa:v:45:y:2011:i:8:p:765-778

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    Related research

    Keywords: Transportation planning Portfolio management Real options Adaptive network design Intercity truck flow;

    References

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    1. Chow, Joseph Y.J. & Regan, Amelia C., 2011. "Network-based real option models," Transportation Research Part B: Methodological, Elsevier, vol. 45(4), pages 682-695, May.
    2. Snyder, Lawrence V. & Daskin, Mark S. & Teo, Chung-Piaw, 2007. "The stochastic location model with risk pooling," European Journal of Operational Research, Elsevier, vol. 179(3), pages 1221-1238, June.
    3. Joseph Chow & Choon Yang & Amelia Regan, 2010. "State-of-the art of freight forecast modeling: lessons learned and the road ahead," Transportation, Springer, vol. 37(6), pages 1011-1030, November.
    4. Ukkusuri, Satish V. & Patil, Gopal, 2009. "Multi-period transportation network design under demand uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 43(6), pages 625-642, July.
    5. Salling, Kim Bang & Banister, David, 2009. "Assessment of large transport infrastructure projects: The CBA-DK model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 800-813, November.
    6. Saphores, Jean-Daniel M. & Boarnet, Marlon G., 2006. "Uncertainty and the timing of an urban congestion relief investment.: The no-land case," Journal of Urban Economics, Elsevier, vol. 59(2), pages 189-208, March.
    7. Hatzopoulou, M. & Miller, E.J., 2009. "Transport policy evaluation in metropolitan areas: The role of modelling in decision-making," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 323-338, May.
    8. Byung Kim & Wonkyu Kim & Byung Song, 2008. "Sequencing and scheduling highway network expansion using a discrete network design model," The Annals of Regional Science, Springer, vol. 42(3), pages 621-642, September.
    9. Alidaee, Bahram & Kochenberger, Gary A. & Amini, Mohammad M., 2001. "Greedy solutions of selection and ordering problems," European Journal of Operational Research, Elsevier, vol. 134(1), pages 203-215, October.
    10. Szeto, W.Y. & Lo, Hong K., 2008. "Time-dependent transport network improvement and tolling strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 376-391, February.
    11. Lo, Hong K. & Szeto, W.Y., 2009. "Time-dependent transport network design under cost-recovery," Transportation Research Part B: Methodological, Elsevier, vol. 43(1), pages 142-158, January.
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    Cited by:
    1. Krüger, Niclas A., 2012. "To kill a real option – Incomplete contracts, real options and PPP," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1359-1371.

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