Massimo Gastaldi

Risk management in supply chain: a real option approach

Purpose – The aim of this paper is that of individualizing a framework for the management of uncertainty in supply chain finalized to reduce the firm risks.Design/methodology/approach – Since a way for reducing the damages deriving from uncertainty sources is increasing the level of flexibility inside the supply chain, and the real option theory allows the increase of the flexibility level, in order to achieve the aim of this work, we utilize the real options theory to coverage of one or more risks inside the supply chain.Findings – A useful theoretical framework has been individualized enabling the selection of possible options to protect the firm against the risk originating from every source of uncertainty. In particular, on two types of risks, using Matlab software, a test has been conducted that proves the ability of the outsource option to cover risks under examination.Practical implications – In the paper a framework providing useful information for the supply chain management is presented.Original...

Financial analysis for investment and policy decisions in the renewable energy sector

The management and exploitation of renewable energy sources is now recognised as central to sustainable development. Environmental concerns, recurring oil crises and market weaknesses, combined with the availability of power from natural resources and resulting possibilities for job creation and energy independence, have all pushed developed and developing countries towards new energy strategies that include RES. This paper analyses the profitability of potential investments in small, medium and large RE electrical power facilities, applying a Net Present Value (NPV) methodology. The proposed financial analysis permits strategic selection of an energy portfolio from among available sources and plant sizes. The paper then discusses potential constraints, and where possible applies the NPV methodology for estimating the necessary changes in decision-making. It defines the role of government incentive schemes in the financial results and evaluates the impact of variation in critical variables (subsidies, sale price of electricity, investment cost, operating cost and equivalent operating hours) on the estimation of NPV. Finally, the paper analyses the environmental impact of all the energy sources examined, examines the links with the financial results and proposes socio-economic policy considerations based on the entirety of the research results. While the methodology is applied to the Italian case, it could be modified to serve in other nations by adapting the input parameters to reflect the different regulatory and market contexts.

Real option's model to evaluate infrastructure flexibility: an application to photovoltaic technology

The high level of uncertainty characterising the future market demand in many industrial sectors makes it necessary to use strategic investment evaluation models that foresee the possibility of determining and managing uncertainty in order to be able to fully take the potentials for creating the value associated with it. By using the approach of real options in this work, a mathematical model is provided for choosing a strategic investment in the photovoltaic industry; this model allows management to handle the uncertainty of the demand that cannot otherwise be dealt with by using the Net Present Value (NPV) as a tool to support decisions. Moreover, it will be shown how this evaluation model is able to reduce the risk of a strategic investment, if compared to the NPV, and point out the hidden value drivers of a managerial decision.

Dynamic analysis of the performance of a flexible manufacturing system: a real case application

In this paper we investigate an automated printed circuit board manufacturing plant. The goal of the study is to select the statistically significant variables and to determine the relative impact on system performance. In solving this problem, mathematical simulation tools and statistical interference are employed to construct appropriate regression models able to predict system behaviour when multiple variables are involved. Using the Response Surface Methodology, a near optimal solution for maximizing the productivity of the system in terms of manufacturing area layout is obtained.

Implementation of a real option in a sustainable supply chain: an empirical study of alkaline battery recycling

Green supply chain management (GSCM) has emerged as a key approach for enterprises seeking to become environmentally sustainable. This paper aims to evaluate and describe the advantages of a GSCM approach by analysing practices and performance consequences in the battery recycling sector. It seeks to integrate works in supply chain management (SCM), environmental management, performance management and real option (RO) theory into one framework. In particular, life cycle assessment (LCA) is applied to evaluate the environmental impact of a battery recycling plant project, and life cycle costing (LCC) is applied to evaluate its economic impact. Firms, also understanding the relevance of GSCM, have often avoided applying the green principles because of the elevated costs that such management involved. Such costs could also seem superior to the potential advantages since standard performance measurement systems are internally and business focused; for these reasons, we consider all the possible value deriving also by uncertainty associated to a green project using the RO theory. This work is one of the few and pioneering efforts to investigate GSCM practices in the battery recycling sector.

A multi-objective optimization strategy for energy plants in Italy

In recent years, Europe has promoted a series of waste regulations to achieve greater protection of the environment. This objective can be obtained by adopting an integrated management system for the reduction of waste production and developing systems for waste sorting, energy recovery and waste recycling. Such interventions that find their justification in an environmental perspective must be also sustainable from an economic perspective. An analysis of the Italian situation highlights a dependency on landfills; this phenomenon must be reduced to identify actions aimed at safeguarding and protecting the environment. The aim of this paper is to analyse the economic and environmental benefits from diverting waste from landfills towards energy recovery in twenty Italian regions.

Municipal waste management and energy recovery in an Italian region.

Diverting waste from landfill is one of the basic priorities on improving the use of resources and reducing the environmental impacts of waste management. In order to achieve this goal it is necessary to limit the amount of materials sent to final disposal and promote energy recovery. In Italy the use of recycling is registering a growing trend but the recourse to landfill is still too high with respect to European Commission targets. The aim of the paper was to analyse the financial and economic benefits that energy recovery could produce by diverting waste from landfills in an Italian region, as landfilling cannot be a solution in the long term because of its finite capacity and for various other ecological reasons. A sensitivity analysis on the critical variables of this plan and a risk analysis are also provided.

Short-term forecasting of municipal load through a Kalman filtering based approach

The paper illustrates some results of a research activity in the field of electric short-term load forecasting (STLF) applied to load areas of municipal or regional extension. To this aim a forecasting procedure has been implemented that is based on time series (univariate) model using a Kalman filtering approach. The model has been applied to data available for a municipal electric utility in Italy. The results thus obtained are reported in the paper and discussed. Some guidelines are finally deduced for farther research work still required in this specific field of forecasting problems.

Multicriteria evaluation model for flexible manufacturing system design

In this paper an automated printed circuit board manufacturing plant is investigated. This study focuses on the typical job shop plant configurations for the semiautomatic manufacturing of parts produced in limited unitary quantities. The treatment consists of the quantitative evaluation of the technological performance of a flexible manufacturing system (FMS) with particular reference to the printed circuit board assembly (PCBA) sector. The use of multicriteria methods as a tool for adequate decision-making in FMS design is presented aiming at reorganizing an existing plant.

Decomposing growth in a multiregional I-O framework

Since the pioneering work of Wassilly Leontief, a remarkable amount of theoretical and empirical work has continuously supported Input-Output modelling. In particular, the peculiar structure of dynamic input-output (I-O) model have originated, in numerous fields ranging from mathematical economics to system theory, an abundance of contributes. This paper deals with the computational problem of managing regional growth within a dynamic multiregional input-output model. Starting from the basic matrices of technological capital and trade coefficients, the regional components associated to a given group of regions are appropriately recognised and separated. A numerical example, based on the Italian case, is also discussed.