Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 270, Issue 1, Pages 1-24Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ejor.2017.11.055
Keywords
Finance; Review article; Real options; Investment under uncertainty; Operations research sub-disciplines
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The Real Options approach to decision-making has been useful in capturing and valuing the flexibility inherent in many operating decisions that decision makers are faced with. In Operations Research (OR), a field that encompasses a plethora of problem-solving techniques for improving decision-making, we note an observable steady increase in contributions that apply the Real Options approach to model, analyze and evaluate flexible operating alternatives available to decision-makers or to optimize the operational efficiency of decision timing. We review 164 papers that appeared in five internationally-renowned OR journals in the last twelve years, cataloguing the main subject themes and contributions where the Real Options approach has been most valuable to Operations Research. We classify the reviewed papers into six main subject themes, and identify their main characteristics, the modeling approaches used, key issues and sub-categories. We further document current trends and suggest promising opportunities for future research. (C) 2017 Elsevier B.V. All rights reserved.
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