• Asian Journal of Innovation and Policy
• /
• v.7 no.3
• /
• pp.581-605
• /
• 2018

In the soft drink industry, especially small and medium enterprises in Japan, there is a possibility of conversion from a labor-intensive industry to a capital-intensive. The demand for soft drinks may not be satisfied in the summer because the supply is too low to meet the demand. To address this situation, this paper proposes optimal investment that integrates demand uncertainty, based on real options approach (ROA) and seasonal autoregressive integrated moving average. Two alternative options are compared and evaluated. One is the Bermudan option: to employ additional workers to elevate efficiency in summer and laying off in winter, this attitude is repeated each year. The other is the American option: to replace equipment to increase machine ability throughout the year. Results in ROA show that the highest improvement is gained if the two options are in a symbiotic relationship. Soft drink producers should search for replacing equipment, using the employees repeatedly. A temporary decision is not equal to an infinite decision.

• Journal of Nuclear Fuel Cycle and Waste Technology(JNFCWT)
• /
• v.15 no.2
• /
• pp.181-189
• /
• 2017

The purpose of this paper is to evaluate several leading options for the management of radioactive metallic waste against a set of general criteria including safety, cost effectiveness, radiological dose to workers and volume reduction. Several options for managing metallic waste generated from decommissioning are evaluated in this paper. These options include free release, controlled reuse, and direct disposal of radioactive metallic waste. Each of these options may involve treatment of the metal waste for volume reduction by physical cutting or melting. A multi-criteria decision analysis was performed using the Analytic Hierarchy Process (AHP) to rank the options. Melting radioactive metallic waste to produce metal ingots with controlled reuse or free release is found to be the most effective option.

• Journal of the Korean housing association
• /
• v.21 no.3
• /
• pp.67-76
• /
• 2010

The purposes of this study are to understand residents' needs in regard to living space and to suggest how to provide layout options for the infill, based on their needs, so that the residents can change their living space to suit their own need. This study analyzed residents' needs in terms of living spaces through literature reviews on apartment remodeling and related previous studies. The results are as follows: First, the residents remodeled the various infill, and remodeling works are then classified into five infill groups according to the flexible features: 1) structural elements, such as flooring, ceilings, interior walls, and windows/doors; 2) equipment elements, such as lighting and electricity, electrical wiring, heating arrangements, and water supply & drainage systems: 3) finishing material elements, such as finishing materials for floors, walls, and ceilings, skirting boards, moldings, and art walls; 4) furniture elements, such as built-in wardrobes, storage closets, and kitchen cabinets; and 5) bathroom facility elements such as faucets and sinks. Second, based on the remodeling features, four ways to provide options can be suggested. 1) options are provided for each room; 2) options are provided in connection with structural elements; 3) options are provided for each finishing material element; and 4) options are provided with the combinations of different bathroom facilities.

• The Korean Journal of Financial Management
• /
• v.27 no.2
• /
• pp.85-114
• /
• 2010

Using the financial institutions that have adopted performance-based stock option plan, this paper examines whether performance-based executive stock options improves effectively firm value. Over the period 2002~2005, we investigate short-term and long-term effects of the performance-based stock options on stock price. The empirical results are summarized as follows. First, the announcement of plain vanilla stock options generates no significant effects on firm value. Meanwhile, the announcement of performance-based stock options results in negative and significant abnormal returns, which is contrary to the expectation. In addition, we find that there are strong, significant and negative announcement effects when banks grant performance-based stock options. Secondly, there is no significant difference between the long-term performance of the sample granting stock options and that of the benchmarks, which is similar to the findings of the previous research. Also, we fail to get any evidence that performance-based stock option awards have improved the long-term firm value.

• The Korean Journal of Financial Management
• /
• v.20 no.1
• /
• pp.61-92
• /
• 2003

As an extension of previous researches with the conclusion that the announcement of adopting stock options generates positive abnormal returns, this paper examined whether the abnormal return changes over time or varies depending on the number of stock options granted. Empirical analysis was made to find whether the announcement of stock option awards has the same response in the stock market from the early days when stock option plans had been introduced in the Korean stock market till today when it was widespread. Results indicate that the announcement effect had been on a gradual decline since 2000. In addition, it is found that if a company announces stock option awards several times, the abnormal return gradually declines in proportion of the number of stock options granted. This implies that as the stock option awards become widespread, the positive effect that the announcement of adopting stock options generates as news has been on a relatively steady decrease. In short, it leads to a conclusion that the more companies grant stock options, and the more stock options a company announces, the less impact it has on the increase in the firm's value.

• Journal of Korea Game Society
• /
• v.14 no.4
• /
• pp.67-74
• /
• 2014

Real options valuation models are now proved as a effective valuation method both in Theoretically and empirically. However, to use real options model for early stage start-ups, additional non-financial information is crucial in the valuation process. Previous studies theoretically suggested the modified real options valuation model and process to use non-financial information in the valuation of early stage startups, but there is no empirical evidence on the suggested model. Therefore, this study investigated the effectiveness of the modified real options valuation model using a case study. The case study result showed that the modified real options valuation effectively reflect the non-financial information in early stage startups, and decrease the forecasting error in the valuation process.

• Proceedings of the Korean Radioactive Waste Society Conference
• /
• 2005.06a
• /
• pp.56-66
• /
• 2005

In response to the increasing emphasis being placed on the importance of international cooperation as part of global efforts to cope with growing non proliferation, and security, concerns in the nuclear field, the Director General of the International Atomic Energy Agency (IAEA), Mohamed ElBaradei, appointed an international group of experts to consider possible multilateral approaches to the nuclear fuel cycle. The mandate of the Expert Group was three fold: ${\bullet}$ To identify and provide an analysis of issues and options relevant to multilateral approaches to the front and back ends of the nuclear fuel cycle; ${\bullet}$ To provide an overview of the policy, legal, security, economic, institutional and technological incentives and disincentives for cooperation in multilateral arrangements for the front and back ends of the nuclear fuel cycle; and ${\bullet}$ To provide a brief review of the historical and current experiences and analyses relating to multilateral fuel cycle arrangements relevant to the work of the Expert Group. The overall purpose was to assess MNAs in the framework of a double objective: strengthening the international nuclear non proliferation regime and making the peaceful uses of nuclear energy more economical and attractive. The Group identifies options for MNAs - options in terms of policy, institutional and legal factors - for those parts of the nuclear fuel cycle of greatest sensitivity from the point of view of proliferation risk. It also reflects the Groups deliberations on the corresponding benefits and disadvantages (pros and cons) of the various options and approaches. Although the Expert Group was able to agree to forward the resulting report to the Director General, it is important to note that the report does not reflect agreement by all of the experts on any of the options, nor a consensus assessment of their respective value. It is intended only to present options for MNAs, and to reflect on the range of considerations which could impact on the desirability and feasibility of those options.

• The Journal of Information Systems
• /
• v.22 no.3
• /
• pp.43-58
• /
• 2013

This work investigates factors that may affect the choice of real options by ERP project managers. Financial theory suggest that these factors include risk-free interest rate, time to maturity, volatility of net present value, and options exercise price. Other than these factors, we are interested in the exogenous risks related to external uncertainties about technological cost, user learning and consulting, and so forth and we argue these risks should have a significant impact upon the volatility of net present value. To validate these factors empirically, we collected survey questionnaires from ERP project managers in Korea. We find that perceived exogenous risks with regard to ERP projects influence volatility and additionally find that ERP project managers prefer contract options of the project when the volatility of the project is expected to be high. We expect that this work will not only validate theoretical propositions but help project managers consider ERP options strategically based on these factors.

• Journal of the Korean Society for Industrial and Applied Mathematics
• /
• v.19 no.1
• /
• pp.1-21
• /
• 2015

This paper presents two algorithms based on the Jamshidian equation which is from the Black-Scholes partial differential equation. The first algorithm is for American call options and the second one is for American put options. They compute numerically free boundary and then option price, iteratively, because the free boundary and the option price are coupled implicitly. By the upwind finite-difference scheme, we discretize the Jamshidian equation with respect to asset variable s and set up a linear system whose solution is an approximation to the option value. Using the property that the coefficient matrix of this linear system is an M-matrix, we prove several theorems in order to formulate a bisection method, which generates a sequence of intervals converging to the fixed interval containing the free boundary value with error bound h. These algorithms have the accuracy of O(k + h), where k and h are step sizes of variables t and s, respectively. We prove that they are unconditionally stable. We applied our algorithms for a series of numerical experiments and compared them with other algorithms. Our algorithms are efficient and applicable to options with such constraints as r > d, $r{\leq}d$, long-time or short-time maturity T.

• Proceedings of the Technology Innovation Conference
• /
• 2001.06a
• /
• pp.117-130
• /
• 2001

R&D is the core competence of an enterprise. Furthermore, R&D requires huge capital investment and has very risky characteristics. Therefore, to be successful in R&D process, several approaches of engineering economics are used prior to decision-making. Until now, typical approaches of engineering economics such as NPV(net present value) or DCF(Discounted cash flow) have been used. But, they cannot properly capture managerial flexibility to adapt and revise later decisions in response to unexpected market development. In a constantly changing and always uncertain marketplace, managerial operation flexibility and strategic adaptability have become vital in order to successfully capitalize on favorable future investment opportunities and limit losses from adverse market development. For the alternatives of conventional static decision-making approaches, new concept of using real options is introduced. Real option theory is based on financial option's characteristics and checks every revision interval whether situation have changed favorable to decision maker or not. In advantageous situation, the decision maker has only to go on. In contrast, with unfavorable situation, he abandons the investment immediately. In this aspect, real option model is more suitable in very uncertain and dynamic business environment in that it can provide the opportunity to cope with flexibility. This paper suggests efficient and effective R&D investment strategy by using real options model. In addition, this paper compares financial options and real options.