Evaluating RFID investments: A real options approach

Alp Ustundag; Seda Ugurlu

doi:10.1007/978-1-4471-4345-1_4

Evaluating RFID investments: A real options approach

Alp Ustundag, Seda Ugurlu^*

^*Corresponding author for this work

Department of Industrial Engineering

Research output: Chapter in Book/Report/Conference proceeding › Chapter › peer-review

Abstract

Real options theory offers a suitable process to consider uncertainties and flexibilities in taking investment decision. This approach highlight options thinking into contemporary Radio Frequency Identification (RFID) project evaluation and management. In this chapter, we describe the options embedded in RFID investments and tools for quantifying option value. An application case is investigated to show the potential of options thinking and the real options methodology for evaluating and valuing the RFID investments. First, options associated with RFID investment are discovered in the case study. Then the RFID investment options are quantified. Finally, sensitivity analysis is conducted for different components of RFID investment such as initial investment and volatility. Based on the findings, an investment strategy for RFID technology has been found.

Original language	English
Title of host publication	The Value of RFID
Subtitle of host publication	Benefits Vs. Costs
Publisher	Springer-Verlag London Ltd
Pages	35-51
Number of pages	17
ISBN (Electronic)	9781447143451
ISBN (Print)	9781447143444
DOIs	https://doi.org/10.1007/978-1-4471-4345-1_4
Publication status	Published - 1 Jan 2013

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© Springer-Verlag London 2013.

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AB - Real options theory offers a suitable process to consider uncertainties and flexibilities in taking investment decision. This approach highlight options thinking into contemporary Radio Frequency Identification (RFID) project evaluation and management. In this chapter, we describe the options embedded in RFID investments and tools for quantifying option value. An application case is investigated to show the potential of options thinking and the real options methodology for evaluating and valuing the RFID investments. First, options associated with RFID investment are discovered in the case study. Then the RFID investment options are quantified. Finally, sensitivity analysis is conducted for different components of RFID investment such as initial investment and volatility. Based on the findings, an investment strategy for RFID technology has been found.

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Evaluating RFID investments: A real options approach

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