Flexible lease contracts in the fleet replacement problem with alternative fuel vehicles: A real-options approach

Ansaripoor, Amir H.; Oliveira, Fernando S.

doi:10.1016/j.ejor.2017.09.010

Cited by 29 publications

(11 citation statements)

References 41 publications

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“…Several literature works analyze investment decisions, particularly for electric vehicles, using this approach. Among these studies include a choice between hybrid vehicles and EVs, while considering the option to change promotion from hybrid vehicles (HVs) to EVs in the future [12]; redesigning or investing in gas, hybrid electric and EVs under uncertainties in gas prices and regulatory standards [13]; the adoption of EVs for mail and parcel distribution, considering the uncertainty about future fuel prices and future battery costs [14]; market growth of investments in plug-in EVs and charging infrastructure for plug-in EV users under fluctuations in gasoline prices [15]; investment decisions and patterns related to HVs under technological and market uncertainties and irreversibility, which impacts the investment and innovation decisions of automotive firms, supporting the development of more sustainable vehicle technologies [16]; and analyzing flexible lease contracts in the fleet replacement problem with alternative fuel vehicles considering CO 2 prices, fuel prices, mileage covered by a vehicle, fuel consumption, and technological uncertainties [17].…”

Section: Introductionmentioning

confidence: 99%

Diesel or Electric Jeepney? A Case Study of Transport Investment in the Philippines Using the Real Options Approach

Agaton

Guno

Villanueva

et al. 2019

WEVJ

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The Philippines is moving towards a more sustainable public transport system by introducing a public utility vehicle (PUV) modernization program with electric jeepneys (e-jeepneys) and modernized diesel jeepneys. Despite its potential to address problems related to air pollution, traffic congestion, dependence on fuel imports, and carbon emissions, transport groups show resistance to the adoption of the government program due to costs and investment risk issues. This study aims to guide transport operators in making investment decisions between the modernized diesel jeepney and the e-jeepney fleet. Applying the real options approach (ROA), this research evaluates option values and optimal investment strategies under uncertainties in diesel prices, jeepney base fare price, electricity prices, and government subsidy. The optimization results reveal a better opportunity to invest in the e-jeepney fleet in all scenarios analyzed. Results also show a more optimal decision strategy to invest in the e-jeepney immediately in the current business environment, as delaying or postponing investment may incur opportunity losses. To make the adoption of the e-jeepney more attractive to transport operators, this study further suggests government actions to increase the amount of subsidy and base fares, establish public charging stations, and continue efforts to rely on cleaner, cheaper, and renewable sources of electricity.

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Section: Introductionmentioning

confidence: 99%

Diesel or Electric Jeepney? A Case Study of Transport Investment in the Philippines Using the Real Options Approach

Agaton

Guno

Villanueva

et al. 2019

WEVJ

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“…The problem is cast as a mean‐CVaR multistage MILP problem, and employ a time‐consistent version of the CVaR (called recursive expected CVaR) which the authors proved to be coherent. The latter research is further developed in Ansaripoor and Oliveira () by incorporating real options and swaps in the leasing contracts.…”

Section: Transportation and Traffic Controlmentioning

confidence: 99%

Conditional value‐at‐risk beyond finance: a survey

Filippi

Guastaroba

Speranza

2019

Int Trans Operational Res

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A large number of problems involve making decisions in an uncertain environment and, hence, with unknown outcomes. Optimization models aimed at controlling the trade‐off between risk and return in finance have been widely studied since the seminal work by Markowitz in 1952. In financial applications, shortfall or quantile risk measures are receiving ever‐increasing attention. Conditional value‐at‐risk (CVaR) is arguably the most popular of such measures. In the last decades, optimization models aimed at controlling risk have been applied to several application domains different from financial optimization. This survey provides an overview of the main contributions where CVaR is incorporated into an optimization approach and applied to a context different from financial engineering. The literature is classified following an application‐oriented perspective. The applications cover classical areas studied in operational research—such as supply chain management, scheduling, and networks—and less classical areas such as energy and medicine. For each area, concise paper excerpts are provided that convey the main ideas of the problems studied, and analyze how the CVaR has been used to cope with different sources of uncertainty. Finally, some open research directions are outlined.

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“…The methodology of real options is often applied in investment evaluation-for example, in the field of the energetics [4][5][6][7][8][9][10][11][12][13], transportation and logistics [14][15][16][17], the issue of PPP projects [18,19], evaluating investments in IT technologies [20,21] or evaluation of the projects in other interesting areas [22,23].…”

Section: Literature Reviewmentioning

confidence: 99%

Sustainable Value of Investment in Real Estate: Real Options Approach

et al. 2018

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The issue of application of real option valuation approach in the valuation of investment project is presented in the article in a way in which the flexibility of the project could be included in the process of its valuation. The authors apply the valuation approach in case of a specific investment project in the real estate in the capital city of the Czech Republic—Prague, using the option to expand, to contract, and to abandon the project. The main aim of this case study is to present a practical application of the investment valuation and to construct an option pricing model for real estate investment which considers and integrates as many aspects of the investment and market environment as possible to describe the best situation of the real estate market and its development. The valuation of the investment is carried out using a universally applicable numerical method of binomial trees. The results obtained are subjected to the sensitivity analysis with respect to the discount rate, value of the most influential parameter of the volatility and the input option parameters. The results of the valuation of the project obtained using the real option approach are important mainly for the management of the company in the process of quantification of the present value of future investments. Implementation of managerial interventions enables for optimizing the value of the project not only in case of favourable development of the real estate market, but particularly in case of unfavourable development. Therefore, they are important in order to protect an investor from potential high losses. Finally, the valuation of these interventions increases the present value of the project, contributing to the decision of the corporate management regarding its implementation.

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Flexible lease contracts in the fleet replacement problem with alternative fuel vehicles: A real-options approach

Cited by 29 publications

References 41 publications

Diesel or Electric Jeepney? A Case Study of Transport Investment in the Philippines Using the Real Options Approach

Diesel or Electric Jeepney? A Case Study of Transport Investment in the Philippines Using the Real Options Approach

Conditional value‐at‐risk beyond finance: a survey

Sustainable Value of Investment in Real Estate: Real Options Approach

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