A real options approach to strategic RFID investment decision

One major roadblock for RFID adoption is to justify its return on investment. Most researchers used cost/benefit analysis, discount cash flow, or net present value method to support the decision; however, these methods does not consider uncertainties and lack flexibility when valuate the investment...

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Bibliographic Details
Main Authors: Xiaodan Wu, Dianmin Yue, Junbo Bai, Chao-Hsien Chu
Format: Conference Proceeding
Language:English
Subjects:
Aerospace industry
Conference management
Cost benefit analysis
Data security
Investments
Pharmaceutical technology
Project management
Radiofrequency identification
Real Options
Return on Investment
RFID
Sensitivity analysis
Strategic Investment Decision
Uncertainty
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Summary:One major roadblock for RFID adoption is to justify its return on investment. Most researchers used cost/benefit analysis, discount cash flow, or net present value method to support the decision; however, these methods does not consider uncertainties and lack flexibility when valuate the investment in RFID. In this paper, we examine the uncertainties and risks associated with RFID investment and propose the use of real options approach to consider them. We demonstrate how can a real options method be used and suggest a process for making strategic RFID investment decision. The results were evidenced and supplemented with a sensitivity analysis.
ISSN:2374-0221
2573-7635
DOI:10.1109/RFID.2009.4911201