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IT Project Selection Model Using Real Option Optimization with Fuzzy Set Approach

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Digital Enterprise and Information Systems (DEIS 2011)

Part of the book series: Communications in Computer and Information Science ((CCIS,volume 194))

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Abstract

Optimal selection of interdependent IT projects for funding in multi period has been challenging in the framework of Real Option analysis. This paper presents a mathematical model to optimize the fuzzy Option value for multi-stage portfolio of IT projects. A fuzzy Option model is used to maximize the Option value of each IT project. The IT portfolio selection problem is formulated as a fuzzy zero-one integer programming model that can handle both uncertain and flexible parameters to determine the optimal project portfolio. The idea of optimizing the fuzzy real option value of the portfolio is to maximize the overall value and to minimize the downside risk of the selected portfolio for funding. A transformation method based on qualitative possibility theory is developed to convert the fuzzy portfolio selection model into a crisp mathematical model from the risk-averse perspective. The transformed model can be solved by an optimization technique .The optimization model and solution approach can help IT managers in optimal funding decision making for projects prioritization.

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Author information

Authors and Affiliations

  1. Dept. of Computer Science and Engineering, Birla Institute of Technology, Mesra, Ranchi, India, 835215

    Shashank Pushkar

  2. Dept. of Computer Applications, National Institute of Technology, Jamshedpur, India, 831014

    Akhileshwar Mishra

Authors
  1. Shashank Pushkar
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  2. Akhileshwar Mishra
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Editor information

Editors and Affiliations

  1. London Metropolitan Business School, London Metropolitan Business University, Eden grove - EG4.06, N7 8EA, London, UK

    Ezendu Ariwa

  2. Information Systems Department, King Saud University, 11543, Riyadh, Saudi Arabia

    Eyas El-Qawasmeh

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© 2011 Springer-Verlag Berlin Heidelberg

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Pushkar, S., Mishra, A. (2011). IT Project Selection Model Using Real Option Optimization with Fuzzy Set Approach. In: Ariwa, E., El-Qawasmeh, E. (eds) Digital Enterprise and Information Systems. DEIS 2011. Communications in Computer and Information Science, vol 194. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-22603-8_12

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  • DOI: https://doi.org/10.1007/978-3-642-22603-8_12

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-22602-1

  • Online ISBN: 978-3-642-22603-8

  • eBook Packages: Computer ScienceComputer Science (R0)

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