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Research and Development Project Portfolio Selection

Hassanzadeh, Farhad | 2010

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  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 42060 (01)
  4. University: Sharif University of Technology
  5. Department: Industrial Engineering
  6. Advisor(s): Modarres Yazdi, Mohammad
  7. Abstract:
  8. Today, Research and Development (R&D) plays an underlying role in all technology-based companies. It is the R&D that creates competitive advantage and determines survival or growth of a company in the fierce market place. R&D, On the other hand, consumes invaluable resources such as capital, human resource, and laboratories which are generally very scarce. This implies that R&D decisions must be treated as huge investment decisions which are made within the strategic framework of a business. The purpose of R&D portfolio selection is to select a set of projects from a pool of candidate projects in order to maximize some financial measures subject to resource availability and technical constraints. However, there are two major issues with such a selection. The first issue is that the conventional valuation techniques used to determine the overall benefit of individual R&D projects may underestimate the true project values and lead to selection of undesirable projects. The second issue is that, since R&D is an unexperienced exertion, R&D data are naturally very uncertain and therefore, considering precise values or even distribution details for decision making is impractical. The objective of this thesis is to develop methods for tackling the problem of R&D portfolio selection by addressing the abovementioned issues. We employ variants of the real option approach to more adequately valuate R&D projects and use robust optimization and fuzzy optimization approaches to address the issue of R&D data uncertainty. We develop single objective, multiple objective, and multi-period formulations to address several classes of the problem. An example from Pharmaceutical industry is consistently used throughout the chapters to show tractability and applicability of the proposed approaches
  9. Keywords:
  10. Project Scheduling ; Portfolio Selection Problem ; Research and Development Strategy ; Real Option Valuation (ROV) ; Portfolio Management ; Interval Uncertainty

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