Deciding on new products using a computer-assisted real options approach

摘要

Technical and market uncertainties are significant challenges for R&D management. Especially, in the case of New Product Development (NPD), investment decisions have to be made under uncertainty due to unknown costs and returns which arise from project complexity and duration. The framework of real options has been proposed for a better understanding of R&D project's uncertainty, for modelling management's flexibility during the project and for selecting the best project alternative. This paper describes the application of a real options approach to the management of NPD projects using standard computer-assisted add-ons to spread sheet technology.