Project planning with alternative technologies in uncertain environments
نویسندگان
چکیده
We investigate project scheduling with stochastic activity durations to maximize the expected net present value. Individual activities also carry a risk of failure, which can cause the overall project to fail. To mitigate the risk that an activity’s failure jeopardizes the entire project, more than one alternative may exist for reaching the project’s objectives, and these alternatives can be implemented either in parallel or in sequence. In the project planning literature, such technological uncertainty is typically ignored and project plans are developed only for scenarios in which the project succeeds. We propose a model that incorporates both the risk of activity failure and the possible pursuit of alternative technologies. We find optimal solutions to the scheduling problem by means of stochastic dynamic programming. Our algorithms prescribe which alternatives need to be explored, and whether they should be investigated in parallel or in sequence. We also examine the impact of the variability of the activity durations on the project’s value. Managerial relevance: Project planning with traditional tools typically ignores technological and duration uncertainty. We explain how to model scheduling decisions in a more practical environment with considerable uncertainty, and we illustrate how decision making based only on expected values can lead to inappropriate decisions. We also refute the intuition that an increase in uncertainty necessarily entails a decrease of system performance, which seconds the proposal to focus also on ‘opportunity management’ rather than only on ‘risk management.’
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ورودعنوان ژورنال:
- European Journal of Operational Research
دوره 242 شماره
صفحات -
تاریخ انتشار 2015