Published May 1985
| Submitted
Working Paper
Open
The Economic Value of Resource Flexibility
- Creators
- Li, Lode
Chicago
Abstract
The economic value of resource flexibility is discussed in the context of a model of a two-stage production process with stochastic variability. A unique optimal barrier policy is characterized with any level of capacity flexibility. The more flexible the capacities, the lower the optimal inventory limit and the higher the profit of the producer. A diffusion approximation of the model is also discussed.
Additional Information
I gratefully acknowledge the insightful suggestions of Erhan Cinlar and Michael J. Harrison.Attached Files
Submitted - sswp570.pdf
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sswp570.pdf
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Additional details
- Eprint ID
- 81499
- Resolver ID
- CaltechAUTHORS:20170915-151842832
- Created
-
2017-09-19Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 570