Referring to the example in section 13.5.4, calculate the expected sales and capacity utilization for the cases of

(a) dedicated capacity investment and

(b) flexible capacity investment.

Transcribed Image Text:

13.5.4 Flexible Capacity Option The concept of flexibility is central in real options with several applications in the fields of operations and supply chain management. In this section we briefly discuss the concept of flexibility in the context of production capacity choice. The idea here is to present flexibility-related options which