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This paper proposes to apply a real option theoretic approach to the modeling and analysis of various types of uncertainty involved in flexible manufacturing system (FMS). In comparison with financial options, real options in FMS, i.e., production options, are identified. A pricing model for production options is proposed based on option theory. The validation of the proposed is presented through a case study.
Engineering Management Conference, 2004. Proceedings. 2004 IEEE International (Volume:3 )
Date of Conference: 18-21 Oct. 2004