Evaluation Method for Strategic Investments

Real Options Analysis (ROA) has become a complimentary tool for engineering economics. It has become popular due to the limitations of conventional engineering valuation methods; specifically, the assumptions of uncertainty. Industry is seeking to quantify the value of engineering investments with uncertainty. One problem with conventional tools are that they may assume that cash flows are certain, therefore minimizing the possibility of the uncertainty of future values. Real options analysis provides a solution to this problem, but has been used sparingly by practitioners. This paper seeks to provide a new model, referred to as the Beta Distribution Real Options Pricing Model (BDROP), which addresses these limitations and can be easily used by practitioners. The positive attributes of this new model include unconstrained market assumptions, robust representation of the underlying asset‟s uncertainty, and an uncomplicated methodology. This research demonstrates the use of the model to evaluate the use of automation for inventory control.

EXPERIMENTAL TREE TRIMMING TO CONTROL AN URBAN WINTER BLACKBIRD ROOST

Every fall millions of blackbirds come down the Mississippi Flyway to return to their winter roosts in Arkansas, Louisiana, and East Texas. When these roosts are located in urban areas, public pressure makes the more common chemical means of control impractical. A less destructive and more permanent method of control was sought. At Rice University, in Houston, Texas, there has been a blackbird roost of various sizes and durations since 1956. For the past two years we have had the opportunity both to study roosting blackbird biology and experiment with habitat alteration as a control method. This particular report concentrates on the results and interpretation of the tree- trimming program initiated in August 1974. The birds involved are primarily Brown-headed Cowbirds (Molothrus ater), along with Starlings (sturnus vulgaris), Common and Great-tailed Grackles (Quiscalus quiscula and Cassidix mexicanus), Red-winged Blackbirds (Agelaius phoenicus) and Robins (Turdus migratorius). The campus comprises 121 ha and was planted with live oaks (Quercus virginiana) in 1912. These trees retain their foliage throughout the winter and now form a closed canopy over some 5-6 ha. In the 60s and early 70s most of the birds that came to Houston for the winter roosted in a 64-ha woodlot 10 km north of campus. In January 1970, the U.S. Fish and Wildlife Roosting Survey reported one million birds at this site we call the North Loop. Fifteen- thousand birds were estimated at Rice.