Valuing Lead Time

The benefits with respect to resilience and avoiding supply-demand mismatches of being able to postpone the decision about what to produce or order are clear but notoriously difficult to quantify.

These postponement benefits can be conceptualized as real options, which means that we can use standard tools from quantitative finance to estimate their value.

In our course material, we cover the basics of option valuation in the supply-chain context and use a competitive game to develop skill and confidence in transforming supply-chain decision making into option valuation.
Who are we?
Prof. Suzanne de Treville
Emeritus Professor of Operations Management at the University of Lausanne and at the Swiss Finance Institute. She currently serves as co-Editor-in-Chief of the Journal of Operations Management. Her research is focused on reducing and valuing lead time. Her lab developed the Cost-Differential Frontier tool that calculates the option value of being able to postpone the decision about what exactly to order or produce.

Dr. Jordi Weiss
Researcher on supply-chain decision making who specializes in the development of simulation games and decision tools to make complex insights from quantitative finance available to supply-chain decision makers.
US Department of Commerce
Our Cost Differential Frontier tool has been feature on the website of the US Department of commerce:
Direct link: