During the course of an R and D project, it is often meaningful and possible to evaluate its status, so that this information may be used for making better financing decisions over time. The project status changes stochastically due to the internal (technological) and the external (market) uncertainties, the former being partially controlled by expenditure of resources. In addition to the resource expenditure strategy, the manager must also decide when to terminate the project. Once the project is terminated, a terminal return is collected, whose value depends on the final project status. It is shown that the project should be terminated if the current status is either too low or too high to make further expenditure worthwhile. Otherwise, for an intermediate (promising) status of the project, an aggressive investment strategy is shown to be optimal. Thus, the model unifies the problems of optimally undertaking, financing and terminating an R and D project in face of various uncertainties.

No abstract

A system deteriorates due to shocks received at random times, each shock causing a random amount of damage which accumulates over time and may result in a system failure. Replacement of a failed system is mandatory, while an operable one may also be replaced. In addition, the shock process causing system deterioration may be controlled by continuous preventive maintenance expenditures. The joint problem of optimal maintenance and replacement is analyzed and it is shown that, under reasonable conditions, optimal maintenance rate is decreasing in the cumulative damage level and that beyond a certain critical level the system should be replaced. Meaningful bounds are established on the optimal policies and an illustrative example is provided.

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

No abstract