Transactions of Japan Society of Kansei Engineering
Online ISSN : 1884-5258
ISSN-L : 1884-0833
Original Articles
Project Evaluation of Some New Store Openings
- A Trial Attempt on Real Option Approach by Monte Carlo Simulation -
Yuma YOSHIOKAMasato TAKAHASHIYoshiyuki MATSUMURATsuyoshi OTANI
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2016 Volume 15 Issue 4 Pages 443-453

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Abstract

Feasibility for opening new store retailer, B, is discussed based on the data of already existing store retailer A. For the business status of A and B stores, we assumed the retail of food and beverages. When manager of A store plans to open new store B, the decision of opening B store is regarded as call option. Here, we simulated the net present value, NPV, for future cash flows of A and B stores based on the real past data already existing A store by Monte Carlo simulation. The daily cash flows of A store shows complex changes repeating increases and decreases. However, the fixed tendency is observed by taking averages of the data during constant period. As for the B store, the same tendency can be applied to the simulation of future cash flows of B store. Differences between A and B stores are location conditions, i.e. the amount of passerby, local community in the vicinity of the store and the amount of parking places. Considering these factors, future cash flows of A and B stores are simulated. Taking into consideration of the cash flows of A stores mainly, the withdrawal of A store (withdrawal option) is decided if the cash flows of A store largely decreases. However, the cash flows of A store increases, the open of new store B (expansion option) is decided. NPV values of cash flows of A+B stores are evaluated under the condition where the withdrawal and expansion options are executed according to the change of cash flows of A store.

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© 2016 Japan Society of Kansei Engineering
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