This text provides informative, short introductions to the core concepts of Operations Management. This text contains more than 50 concept entries and is fully cross-referenced.An outstanding reference for Operations Management students at all levels. 

Real Options

Real options

A real option is the right, not the obligation, to acquire a real asset (or to lease or make another form of management decision relative to this asset).

Real Options

An option is the right, not the obligation, to do something. Most business transactions are regulated by strict contractual terms. In a sales contract, for example, both parties commit to the exchange of a good or service in exchange of money. A key innovation in modern finance has been the introduction of option contracts written over financial assets. In the system view of operations systems (see System), we saw that these are built from resources. These resources are real assets rather than financial assets. Some real assets are tangible, as for example inventory and plant ...

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