IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v15y1968i2pb18-b29.html
   My bibliography  Save this article

Robustness in Sequential Investment Decisions

Author

Listed:
  • Shiv K. Gupta

    (University of Pennsylvania)

  • Jonathan Rosenhead

    (London School of Economics)

Abstract

Long-range investment plans, particularly for expansion or decentralization, often consist of a number of separate but interacting investments spaced over a number of years. Where there is appreciable uncertainty about external conditions in the future, it is possible that a "best" scheme based on the state of current knowledge will prove during the course of the intervening years to be less than good. One way of guarding against this danger is to ensure that the early (and therefore irreversible) steps in the investment sequence keep open as many options of "good" schemes as possible. Concepts of robustness and stability are developed. As a practical example of the use of these concepts a case study is presented, which deals with the location of sites for new factories in an industrial expansion program.

Suggested Citation

  • Shiv K. Gupta & Jonathan Rosenhead, 1968. "Robustness in Sequential Investment Decisions," Management Science, INFORMS, vol. 15(2), pages 18-29, October.
    • Handle: RePEc:inm:ormnsc:v:15:y:1968:i:2:p:b18-b29
    DOI: 10.1287/mnsc.15.2.B18
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.15.2.B18
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.15.2.B18?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gutierrez, Genaro J. & Kouvelis, Panagiotis & Kurawarwala, Abbas A., 1996. "A robustness approach to uncapacitated network design problems," European Journal of Operational Research, Elsevier, vol. 94(2), pages 362-376, October.
    2. Hites, R. & De Smet, Y. & Risse, N. & Salazar-Neumann, M. & Vincke, P., 2006. "About the applicability of MCDA to some robustness problems," European Journal of Operational Research, Elsevier, vol. 174(1), pages 322-332, October.
    3. Ion Georgiou & Joaquim Heck, 2021. "The emergence of problem structuring methods, 1950s–1989: An atlas of the journal literature," Systems Research and Behavioral Science, Wiley Blackwell, vol. 38(6), pages 756-796, November.
    4. Driouchi, Tarik & Leseure, Michel & Bennett, David, 2009. "A robustness framework for monitoring real options under uncertainty," Omega, Elsevier, vol. 37(3), pages 698-710, June.
    5. Christoph Dorsch, 2015. "On the Sound Financial Valuation of Flexibility in Information Systems," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(2), pages 115-127, April.
    6. Hüser, Christian, 2006. "Robustness - a challenge also for the 21st century: A review of robustness phenomena in technical, biological and social systems as well as robust approaches in engineering, computer science, operatio," UFZ Discussion Papers 2/2006, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    7. Hahn, G.J. & Kuhn, H., 2012. "Simultaneous investment, operations, and financial planning in supply chains: A value-based optimization approach," International Journal of Production Economics, Elsevier, vol. 140(2), pages 559-569.
    8. Eustace, Deogratias & Russell, Sr., Eugene R. & Landman, E. Dean, 2003. "Application of Robustness Analysis for Developing a Procedure for Better Urban Transportation Planning Decisions," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 42(1).
    9. Li, Na & Jiang, Yue & Zhang, Zhi-Hai, 2021. "A two-stage ambiguous stochastic program for electric vehicle charging station location problem with valet charging service," Transportation Research Part B: Methodological, Elsevier, vol. 153(C), pages 149-171.
    10. Alizadeh, Reza & Lund, Peter D. & Beynaghi, Ali & Abolghasemi, Mahdi & Maknoon, Reza, 2016. "An integrated scenario-based robust planning approach for foresight and strategic management with application to energy industry," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 162-171.
    11. Mausser, Helmut E. & Laguna, Manuel, 1999. "A heuristic to minimax absolute regret for linear programs with interval objective function coefficients," European Journal of Operational Research, Elsevier, vol. 117(1), pages 157-174, August.
    12. Grubbstrom, Robert W. & Olhager, Jan, 1997. "Productivity and flexibility: Fundamental relations between two major properties and performance measures of the production system," International Journal of Production Economics, Elsevier, vol. 52(1-2), pages 73-82, October.
    13. John Friend, 2006. "Labels, methodologies and strategic decision support," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(7), pages 772-775, July.
    14. Yard, Stefan, 2000. "Developments of the payback method," International Journal of Production Economics, Elsevier, vol. 67(2), pages 155-167, September.
    15. J Rosenhead, 2009. "Reflections on fifty years of operational research," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(1), pages 5-15, May.
    16. H-Y Wong, 2007. "Using Robustness Analysis to structure online marketing and communication problems," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(5), pages 633-644, May.
    17. Włodzimierz Ogryczak, 2010. "Conditional median as a robust solution concept for uncapacitated location problems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 18(1), pages 271-285, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:15:y:1968:i:2:p:b18-b29. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.