Vertical Integration and Operational Flexibility

The main aim of the paper is to highlight the relation between flexibility and vertical integration. To this purpose, we go through the selection of the optimal degree of vertical disintegration of a flexible firm which operates in a dynamic uncertain environment. The enterprise we model enjoys flexibility since it can switch from a certain amount of disintegration to vertical integration and viceversa. This means that the firm never loses vertical control, i.e., the ability to produce all inputs even when it buys them in the market. This sort of flexibility makes for results which are somehow contrary to the Industrial Organization recent literature and closer to the Operations Research results. In this sense we provide a bridge between the two approaches and rescue Industrial Organization from counterintuitive conclusions.Vertical Integration, Outsourcing, Entry, Flexibility

On flexibility

By building on theoretical work by Mills and Schumann (1985) and Ungern-Sternberg (1990) this paper provides evidence on the determinants of two dimensions of flexibility, the flexibility in adjusting aggregate output over time (tactical flexibility) as well as the ability to switch quickly between products (operational flexibility). Econometric analysis of a sample of 40.000 farms in Upper-Austria for the period 1980 to 1990 suggests that larger full-time farms operated by younger, better educated farm operators are more flexible, ceteris paribus. The results further indicate a significant and negative interrelationship between tactical and operational flexibility. --tactical and operational flexibility,panel data,farm households

Vertical Integration and Operational Flexibility

The main aim of the paper is to highlight the relation between flexibility and vertical integration. To this purpose, we go through the selection of the optimal degree of vertical disintegration of a flexible firm which operates in a dynamic uncertain environment. The enterprise we model enjoys flexibility since it can switch from a certain amount of disintegration to vertical integration and viceversa. This means that the firm never loses vertical control, i.e., the ability to produce all inputs even when it buys them in the market. This sort of flexibility makes for results which are somehow contrary to the Industrial Organization recent literature and closer to the Operations Research results. In this sense we provide a bridge between the two approaches and rescue Industrial Organization from counterintuitive conclusions

Governance Issues for Health Insurance Exchanges

Outlines considerations for states in deciding how to structure a health insurance exchange, as well as issues of funding sources, operational flexibility, political independence and accountability, management structure, and sub-state dimensions

A Commodity Production Model with Operational Flexibility of Investing Optional Capacity on Offshore Platforms

We study the problem of operational flexibility on capacity investment of an oil producer. Our decision-maker operates only on land fields and has option to extend operations to offshore oil platforms. The operational flexibility arises from the ability to invest on offshore fields. Our main goal is to integrate offshore platforms from the chemical and petroleum engineering literature, and capacity investment from operations management literature. We use a mixed integer programming solution approach and set a basic model to analyse the value of operational flexibility. Our main contribution is to provide an operational flexibility option to the problem of oil drilling

Risk management of power portfolios and valuation of flexibility

Risk management by applying operational flexibility is becoming a key issue for production companies. This paper discusses how a power portfolio can be hedged through its own production assets. In particular we model operational flexibility of a hydro pump storage plant and show how to dispatch it to hedge against adverse movements in the portfolio. Moreover, we present how volume risk, which is not hedgeable with standard contracts from power exchanges, can be managed by an intelligent dispatch policy. Despite the incompleteness of the market we quantify the value of this operational flexibility in the framework of coherent risk measure

Industry 4.0 enabling technologies for increasing operational flexibility in final assembly

The manufacturing industry is facing uncertainties caused by growing competition and increasing customer demands. Simultaneously, the fourth industrial revolution, commonly referred to as Industry 4.0, is helping in modernising the manufacturing industry. In the process of modernising, companies are now capable of building resilience into their systems. This resilience is in the form of higher operational flexibility, which helps cope with the growing uncertainties. The new technologies under the Industry 4.0 umbrella can be used to increase operational flexibility. This article summarises various Industry 4.0 enabling technologies that can increase operational flexibility in final assembl