Investments viewed as growth processes

For modeling investment decision situations, we present a mathematical basis that views the cash flow sequences as growth processes. We first emphasize the pedagogical value of the basic model by showing that all traditionally established measures of worth (profitability) as well as the compound interest formulas of financial mathematics can actually be derived from it by simple algebraic manipulations. Then, we argue that the traditional measures fail to recognize the particularities of certain decision situations and point out the need for developing tailor made measures for each specific problem. We demonstrate, using real life examples, our approach for developing new measures and, by incorporating decision variables, practical optimization models from this mathematical basis. © 1995 Taylor & Francis Group, LLC

De-risking Fleet Replacement Decisions

This paper outlines the different modelling approaches for realizing sustainable operations of assetreplacement. We study the fleet portfolio management problem that could be faced by a firm deciding ahead which vehicles to choose for its fleet. In particular it suggests a model that enables generating a plan of vehicle replacement actions with cost minimization and risk exposure simulation. It proposes to use conditional value at risk (CVaR) to account for uncertainty in the decision process, and to use clusters modelling to align the generated plan with vehicle utilization