Decision theory: an introduction to the mathematics of rationality
Decision theory: an introduction to the mathematics of rationality
Dynamic Portfolio Selection of NPD Programs Using Marginal Returns
Management Science
Structuring the New Product Development Pipeline
Management Science
Product Development Decisions: A Review of the Literature
Management Science
Contingent Portfolio Programming for the Management of Risky Projects
Operations Research
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Companies invest in a portfolio of products with the financial objective of increasing revenue and net profit. They also have a limited product development budget and uncertainty around which products will be successful. In this paper, we offer a methodology to manage the allocation of a limited budget across a portfolio of products. Specifically, we provide a practical approach for quantifying the risk in relation to attaining financial objectives, and we offer an approach to reallocate the limited budget across the various products. This approach also provides long-term financial implications of investment decisions that are taken today. This practical end-to-end methodology can build on existing portfolio management practices prevalent in many companies. The approach uses all available measured and estimated data, expert opinions, and mathematical techniques for risk elicitation, Monte Carlo simulation for risk quantification, and mathematical programming with risk measures for optimal reallocation. We also introduce a web-based tool, called Portfolio Risk and Investment Management Engine, that implements this methodology along with an illustrative case study.