• IE interfaces
• /
• v.18 no.2
• /
• pp.184-192
• /
• 2005

In recent research there has been intense interest in understanding how real option valuation (ROV) approaches might usefully complement conventional discounted cash flow (DCF) techniques. However, investment decision makers in a real world have been worried about adopting the ROV approaches mainly because of difficulty in technically understanding the theory of the ROV approaches as indicated by many researchers. With this difficulty in mind, we propose the opportunity cost model as another discrete-time model to value a deferral option. The main advantage of observing a real options value in terms of the opportunity cost concept is to provide a technique for practitioners to estimate a wide range of real options values without sticking to a financial option modelling. The fundamental ground for developing the opportunity cost model proposed in this paper lies in the work of dissecting the structure of the real options value into three categories: capital gain, expected opportunity loss, and expected opportunity gain. At the end of the paper, we will present a short illustrative example to demonstrate the applicability of the model.

• Proceedings of the KIEE Conference
• /
• 2005.07a
• /
• pp.751-753
• /
• 2005

In this raper, Economic value of reserve margin i.i presented by opportunity cost for Korean power system, and the level of compensation for spinning reserve that is necessary to operate power system stably is proposed. The generator that is giving up for opportunity to participate in energy market must take opportunity cost. it is relative to not only whole demand level but also marginal cost of each resource. In this paper, assume that all resource in Korea is equivalent to six generator for simulation. and we evaluate value of reserve in the time of high demand and low demand. Also we propose the way to improve a evaluation method by examine relationship between capacity payment and value of reserve.

• Health Policy and Management
• /
• v.23 no.2
• /
• pp.124-131
• /
• 2013

Background: This study aimed to measure the opportunity income by identifying the economic length of stay (ELOS) which is the intersection point of daily revenue and cost on appendectomy and pneumonia cases. Methods: The research subjects were 460 patients of appendectomy and 606 patients of pneumonia, discharged from a general hospital between July 1, 2009 and June 30, 2010. ELOS calculated with both of total revenue on diagnosis-related group (DRG) and fee-for service (FFS). The cost is calculated by activity-based costing system of the hospital. Results: Average length of stay (ALOS) of appendectomy was 4.48 days and its average revenue per case were 1,710,215 (1,989,105) won by DRG (FFS). The variable cost was 491,262 won which was 28.7% (24.7%) of DRG (FFS) total revenue. And 97.2% of the total variable cost was incurred within 2 days from admission. The ELOS was 4 (5) days in DRG (FFS). Shortening three days (two days) would increase opportunity income 52.0% (82.2%) in DRG (FFS). ALOS of pneumonia case was 4.86 days and its average revenue per case were 489,448 (761,426) won by DRG (FFS). The variable cost was 27,230 won which was 5.6% (3.6%) of DRG (FFS) total revenue. Thirty-eight point nine percent of the daily variable cost was incurred in discharge date. The ELOS was 2 (4) days in DRS (FFS). Shortening three days (one day) would increase opportunity income 27.6% (37.2%) in DRG (FFS). Conclusion: The ELOS would be used by strategic index for achieving minimum profit and developing the ways to get there. But we also should not pass over that the opportunity income obtained by the reducing ALOS may cause some problem of quality.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.17 no.32
• /
• pp.233-242
• /
• 1994

This study deals with the derivative adverse minimum for inferiority system depends on continuose operating under infinite planning horizon. This planning will be accomplished by maintenance limit renewal policy in consideration of opportunity cost which affects system by failure during operation periods and expected cost under nomal operation states. By the results, we will be expected incresing total efficiency for the system by optimal renewal policy.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.3
• /
• pp.157-165
• /
• 2020

This paper estimates the optimum level of reserves in Vietnam based on the approach of reserves' cost-benefit and sovereign risk which is one of developing countries' characteristics. The cost of reserves is the opportunity cost when holding reserves. The benefit of reserves is the loss due to country's default in case that there is no reserves to finance external debt payment. The optimum reserves is found out by minimizing the total of opportunity cost and loss due to country's default with the probability of default. Through the usage of HP Filter method for calculating the loss due to country's default, ARDL regression for the risk premium model and lending rate of VND as proxy for opportunity cost together with the Vietnamese economic data in the period of 2005 - 2017, the empirical results show that the optimum reserves in Vietnam is almost higher than the actual reserves during the research period except the point of Q3/2008 and the last point of research period - Q4/2017. Therefore, Vietnam should continue to increase reserves for safety but Vietnam does not need pushing quickly the speed of increasing reserves. In addition, controlling Vietnamese optimum reserves is necessary to help the actual reserves become reasonable.

• Proceedings of the Korean Society for Quality Management Conference
• /
• 1998.11a
• /
• pp.269-276
• /
• 1998

This paper proposes an opportunistic age replacement policy. The system has two types of failures. Type I failures (minor failures) are removed by minimal repairs, whereas type II failures are removed by replacements. Type I and type II failures are age-dependent. A system is replaced at type II failure (catastrophic failure) or at the opportunity after age T, whichever occurs first. The cost of the minimal repair of the system at age z depends on the random part C(z) and the deterministic part c(z). The opportunity arises according to a Poisson process, independent of failures of the component. The expected cost rate is obtained. The optimal $T^{\ast}$ which would minimize the cost rate is discussed. Various special cases are considered. Finally, a numerical example is given.

• Journal of Korean Institute of Industrial Engineers
• /
• v.29 no.2
• /
• pp.126-134
• /
• 2003

Among a variety of models proposed by so far to calculate the real options value when the investment decision about the underlying project may be delayed, the Black-Scholes and the binomial lattice models have been widely used and discussed by academics and practitioners. However these two models do not provide us with intuition into how it is constructed and what it does really mean. In this paper, we will therefore explore its components and practically more intuitive meaning. With the components explored, we developed the mathematical model to calculate the real options value and thus strategic net present value, based on the opportunity cost concept, for which the investment decision about the underlying project is postponed by one year. We will finally present a short illustrative example for readers better understanding on the model proposed in the paper.

• The Transactions of the Korean Institute of Electrical Engineers A
• /
• v.53 no.1
• /
• pp.67-72
• /
• 2004

This paper addresses the bidding strategies of generating firms in a competitive market where the firms are provided with payment for generating reactive power. Reactive support for voltage control is an integral and critical part of power system operations. Since reactive support is unbundled in a competitive market under open access transmission, it is treated as one of ancillary services. The operation costs and opportunity costs for reactive support are compensated by payment to the firms, hence their bidding strategies will be affected. The opportunity costs are evaluated from the foregone profits of a generator in making sales in real power market by providing reactive support instead of real power. Game theory approach is used to analysis the transaction strategies of real power by the bimatrix method in this paper. Through computing the Nash equilibrium in a sample system, an incentive of a generator for improving the reactive generating capacity is found to be effective and the variations of the profits are analyzed as the demand power factor changes.

• Journal of the Korean Home Economics Association
• /
• v.41 no.7
• /
• pp.157-168
• /
• 2003

The purposes of this study were to explore the rural women's labor by measuring labor value economically. To achieve the purpose, this study applied four methods : replacement cost method individual function, replacement cost method generalist, opportunity cost method and shadow wage method. The results of this study were as follows: 1) Time used for agricultural work and household work by with women were 5.3 hours and 3.8 hours each. 2) According to the methods used, the amounts of valuing rural women's labor were varied and ranged from 23,000 won to 43,000 won per day. This study might help recognize the degree of rural women's labor contribution to the household income of farm households and improve the socio-economic status of rural women through showing the productivity of the rural women's labor.

• The Journal of the Institute of Internet, Broadcasting and Communication
• /
• v.12 no.5
• /
• pp.141-151
• /
• 2012

This paper suggests more simple algorithm than Hungarian algorithm for assignment problem. Hungarian algorithm selects minimum cost of row and column, and subtracts minimum cost from each cost. Then, performs until the number of minimum lines with 0 equals the number of rows. But, the proposed algorithm selects the minimum cost for each rows only. From the start point with over 2 to the target point with null selects in column, fixes the maximum opportunity cost that the difference of the cost of starting point and target point, and moves the cost less than opportunity cost th more than previous cost. For the 25 balance and 7 unbalance assignment problems, This algorithm gets the optimal solution same as Hungarian algorithm. This algorithm improves the time complexity $O(n^3)$ of Hungarian algorithm to $O(n^2)$, and do not performs the transformation process from unbalance to balance assignment in Hungarian algorithm. Therefore, this algorithm can be alter Hungarian algorithm in assignment problem.