International Journal of Real Options and Strategy
Online ISSN : 2186-4667
ISSN-L : 2186-4667
Theoretical Paper
Investment, Capacity Choice and Outsourcing Options under Uncertainty
Makoto GotoRyuta Takashima
Author information

2013 Volume 1 Pages 17-27


In this paper, we formulate the investment of a firm in a production facility with maximum capacity and outsourcing strategy. Previous research on capacity selection has resulted in explosive capacity and long delay in investment. The possibility that a firm will install a facility with an explosive capacity is slight, and firms can generally outsource production when the demand exceeds the capacity of a facility. The outsourcing strategy is expected to inhibit capacity, accelerate investment, and increase value. In this paper, we simultaneously investigate the optimal investment timing, the size of a facility, and the outsourcing strategy.

Content from these authors
© 2013 The Japan Association of Real Options and Strategy
Previous article Next article