An Integrated Model of Scenario Planning and Decision Tree Analysis for New Product Development Financial Planning: A Case of Smart Phone Development Project in Taiwan

Authors

  • Jei-Zheng Wu Department of Business Administration, Soochow University, Taiwan
  • Kuo-Sheng Lin Department of Financial Management, National Defense University, Taiwan
  • Chiao-Ying Wu Department of Business Administration, Soochow University, Taiwan

DOI:

https://doi.org/10.23055/ijietap.2015.22.1.1317

Keywords:

Decision Tree Analysis, Scenario Planning, New Product Development Project, Influence Diagram, Discounted Cash Flow

Abstract

Demands of smart phones have been rapidly and dramatically increasing whereas R&D and marketing of smart phones have been facing severer competition and more dynamic environment. Most existing studies of new product development (NPD) focused on the traditional net-present-value (NPV) method and the real option analysis which are lack of flexibility to model asymmetric multi-stage decisions and flexible uncertain states. This study aims to integrate scenario planning and decision tree analysis for NPD evaluation. In so doing, scenarios for modeling uncertainties can be generated systematically. A case study of a Taiwanese OEM company shows the viability of the proposed model. Compared with the performance of the realized decisions, the proposed analysis is more robust and lowering the risk to minimal with appropriate R&D resource allocation. A two-way sensitivity analysis helps determine boundaries of the probability of R&D success and the cost of R&D where the R&D project will become profitable.

Author Biography

Jei-Zheng Wu, Department of Business Administration, Soochow University, Taiwan

Dr. Jei-Zheng Wu is an Associate Professor at Department of Business Administration, Soochow University (SCU), Taipei, Taiwan, R.O.C. He received his PhD and MS in Industrial Engineering and Engineering Management from National Tsing Hua University (NTHU). He received BS with double majors in Business Administration and Mathematics from National Taiwan University. His professional experience includes Adjunct Professor at NTHU, Yuan Ze University, Postdoctoral researcher at NTHU, and co-op at IBM Thomas J. Watson Research Center. He received the Best Paper Award at the Twelfth Asia Pacific Industrial Engineering & Management System (APIEMS 2011), the Best Paper Award at the CIIE Annual Meeting (2011 and 2010), and the Young Scientist Prize at the Intelligent Manufacturing & Logistics Systems International Conference in 2008. His main research interests include intelligent manufacturing, manufacturing strategy, operations management, supply chain management, decision analysis, meta-heuristics, and decision support systems. His research works have appeared in reputed international journals including OR Spectrum, Computers & Industrial Engineering, International Journal of Production Research, IEEE Transactions on Semiconductor Manufacturing, Journal of Intelligent Manufacturing, International Journal of Shipping and Transport Logistics, Flexible Services and Manufacturing Journal, INFORMATION An International Interdisciplinary Journal, Expert Systems and Applications, Industrial Engineering and Management Systems, Journal of Quality. He has served as Guest Editors for a number of journals including OR Spectrum, Flexible Services and Manufacturing Journal, and Journal of Quality.

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Published

2015-02-27

How to Cite

Wu, J.-Z., Lin, K.-S., & Wu, C.-Y. (2015). An Integrated Model of Scenario Planning and Decision Tree Analysis for New Product Development Financial Planning: A Case of Smart Phone Development Project in Taiwan. International Journal of Industrial Engineering: Theory, Applications and Practice, 22(1). https://doi.org/10.23055/ijietap.2015.22.1.1317

Issue

Vol. 22 No. 1 (2015): 2013 IJIE Conference at Busan, Korea II

Section

Special Issue: 2013 IJIE Conference at Busan, Korea

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