Describing, assessing and embedding flexibility in system architectures with application to wireless terrestrial networks and handset processors

Thesis (S.M.)--Massachusetts Institute of Technology, System Design & Management Program, June 2004."January 2004."Includes bibliographical references (p. 165-168).This thesis presents a framework that can be used to identify the flexibility attributes and determine the value of embedding flexibility in system architectures, from the context of network based wireless applications and wireless handset processors Flexibility is first defined and the three dimensions of flexibility - performance, capacity and functionality are explored. This analysis is used to formulate a general model of the dimensions of flexibility. The analysis to determine the value of embedding flexibility is then done using the example of a flexible handset processor. The Black-Scholes model and the Binomial model are presented as methods for computing the economics of financial options. These methods are then applied to computing the value of flexibility options. In order to determine the value of the underlying asset, which is one of the terms needed for the valuation of flexibility, two approaches are presented: conjoint analysis and concept engineering. The bounds of time to expiation are explored. The cost of embedding flexibility is then assessed. Finally, a few methods are proposed for determining the optimal flexibility design vector and implementing a portfolio of real option based flexibility strategy.by Prithviraj Banerjee.S.M