Title

A Framework For Operational Innovation Selection Using Real Option Dynamic Decision

Keywords

Competitiveness; Operational Innovation Selection; Risk and Uncertainty; Strategic Investment Method

Abstract

Changes in advanced technologies and customer's preferences, and higher market competitive pressures have driven the need to transform existing business operations through operational innovations. The operational innovations have become a key feature for businesses in order to enhance revenue and market competitive advantages. However, there are challenges for developing them due to a lack of the proper decision analysis tools, understanding of the impacts transformation will have on operational models, and the time limits of the innovation life cycle. This research introduces a new decision-making framework which integrates a strategic investment method, management transition and competitiveness evaluations, and dynamic behavior modeling to capture the uncertainty and impact of competitors. This framework is used to analyze the feasibility of the transformation, and to assess return on investment of new operation schemes. United Parcel Service of America, Inc. is used as case study. The benefits of this decision-making framework are to provide increased flexibility and more information to decision makers, and to assess the return on investment value of operational innovation considering uncertainty and competitiveness.

Publication Date

1-1-2014

Publication Title

IIE Annual Conference and Expo 2014

Number of Pages

1401-1410

Document Type

Article; Proceedings Paper

Personal Identifier

scopus

Socpus ID

84910090502 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84910090502

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