A Real Options design for quality control Charts

摘要

We develop a financial model for a manufacturing process where quality can be affected by an assignable cause. We value the real options associated with applying a statistical process control chart using the Black-Scholes equation, binomial and pentanomial lattices, and Monte Carlo simulation methods. This valuation gives decision makers a way to choose the appropriate quality control strategy based on an integrated view of the market dynamics with the manufacturing operational aspects.