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Article
Publication date: 4 April 2017

Mahsa Montajabiha, Alireza Arshadi Khamseh and Behrouz Afshar-Nadjafi

The principal concern of organization managers in the global rivalry of commerce environment is how to select the project portfolio among available projects. In this matter…

709

Abstract

Purpose

The principal concern of organization managers in the global rivalry of commerce environment is how to select the project portfolio among available projects. In this matter, organizations should consider the uncertainty intrinsic in the projects regarding an appropriate valuation technique within an optimization framework. In this research, the purpose of this paper is to formulate using a robust optimization algorithm to deal with the complexities and uncertainty inherent in the construction of the project portfolio.

Design/methodology/approach

First, a general mathematical formulation is presented, which in compound real options valuation is highlighted. This formulation gives managerial flexibility by correcting the deficiency of traditional discounted cash flow technique that excludes any form of flexibility. Then, considering a limitation on budget of the organization, an integer programming formulation to maximize the n-fold compound options for project portfolio selection is proposed. Finally, a robust optimization model is developed along with the robust combinatorial optimization algorithm, which is effective for solving problems under uncertainty.

Findings

Sensitivity analysis showed that projects in later phases of development, having survived several phases of pre-clinical and clinical tests, are worth more because they are more likely to pertain to business. However, the investment costs related to each project during development phases limit the number of projects that a company can bring to their final portfolio. Additionally, the analysis of conservatism level represented how project managers can quite easily determine their risk attitude and the corresponding portfolio composition. From a managerial point of view, the proposed framework is very useful because it requires only financial estimates. Hence, the proposed decision support tool can assist research and development (R&D) project managers in the pharmaceutical industry for making decisions.

Originality/value

The first is the application of the n-fold compound options on portfolio of R&D projects and the employment of compound options value of a project portfolio as an objective function. The second one is a mathematical formulation of these concepts and solving it by the robust combinatorial optimization algorithm. The literature is lacking in the application of the robust combinatorial optimization algorithm to R&D project portfolio selection based on the generalized n-fold compound option model of Cassimon et al. (2004). Every framework from calculation of the n-fold compound option to solving robust combinatorial algorithm is programmed in Matlab software, since it can be used as a business support tool.

Details

International Journal of Managing Projects in Business, vol. 10 no. 2
Type: Research Article
ISSN: 1753-8378

Keywords

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Article
Publication date: 25 July 2024

Hamid Riazi, Mahmood Doroodian and Behrouz Afshar-Nadjafi

The purpose is to have appropriate planning for reducing costs during the procurement process and increasing profits during the sales period in a supply cycle at a retail store…

133

Abstract

Purpose

The purpose is to have appropriate planning for reducing costs during the procurement process and increasing profits during the sales period in a supply cycle at a retail store. To make the proposed model practical, efforts have been made to implement the existing constraints in a business environment and legal factors.

Design/methodology/approach

To achieve the objectives of this research, a mixed-methods approach was employed. Initially, sales data was collected, and industry experts were consulted to identify key products. A mathematical model and a particle swarm optimization algorithm were utilized for simulation and optimization. Furthermore, time series forecasting techniques were employed to estimate demand accurately.

Findings

The findings of this research emphasize the importance of considering all factors affecting costs simultaneously when utilizing tools to reduce costs during the planning period. It was observed that certain tools, which individually have a favorable effect on costs, may collectively result in an increase in costs over the examined period. This highlights the need for a comprehensive and integrated approach to planning.

Research limitations/implications

The business environment and legal factors in each country are among the factors that affect the performance of retailers, which has received less attention in previous research. This research aimed to address this gap by considering various factors. However, it is important to note that the proposed model has been investigated in research in hypermarkets and is applicable, but it cannot be generalized to other retailers.

Originality/value

Applicability and consideration of new limitations in simulation along with consideration of the complete process from buying to selling goods.

Details

International Journal of Retail & Distribution Management, vol. 52 no. 6
Type: Research Article
ISSN: 0959-0552

Keywords

Available. Content available
Article
Publication date: 4 April 2017

Nathalie Drouin

485

Abstract

Details

International Journal of Managing Projects in Business, vol. 10 no. 2
Type: Research Article
ISSN: 1753-8378

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