Energy sources and commodities exhibit high price risk. This risk is thus an important feature of operational models of the value chains for these goods. These models typically employ Gaussian-based representations of the evolution of this uncertainty. This approach facilitates the optimization...

Merchant operations is an approach to manage commodity and energy conversion assets modeled as real options. Firms operate networks of such assets, e.g., multiple wind or solar farms that generate electricity at different geographical locations, may be coupled with local grid-level energy...

Practitioners use the basket of spread options (BSO) heuristic to model merchant energy storage as a portfolio of spread options and spot/forward sales. This method solves a linear program to obtain the composition of this portfolio and its associated BSO policy. Sequential reoptimization of...

Commodity conversion assets play important economic roles. It is well known that the market value of these assets can be maximized by managing them as real options on the prices of their inputs and/or outputs. In particular, when futures on these inputs and outputs are traded, managing such real...

The extant literature on the vehicle routing problem with stochastic demands indicates that restocking yields moderate percentage expected cost reductions relative to the a priori approach, but lacks theoretical support for this improvement. We conduct a worst-case analysis that corroborates the...

The real option management of commodity conversion assets gives rise to intractable Markov decision processes (MDPs), in part due to the use of high dimensional models of commodity forward curve evolution, as commonly done in practice. Focusing on commodity storage, we identify a deficiency of...

Merchant operations involves valuing and hedging the cash flows of commodity- and energy-conversion assets as real options based on stochastic models that inevitably embed model error. In this paper we quantify how empirically calibrated model errors concerning the futures term-structure affect...

The COVID-19 pandemic has caused huge and disruptive technological changes in the healthcare sector, transforming the way businesses and societies function. To respond to the global health crisis, there have been numerous innovation projects in the healthcare sector, including the fast design...