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Production Portfolio Theory: Risk Evaluation and a New Industrial Application (IA)

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Advances in Information and Communication (FICC 2024)

Part of the book series: Lecture Notes in Networks and Systems ((LNNS,volume 919))

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Abstract

The world is shifting slowly towards bigger structures, institutions and rules, which could also be named as a societal gravitational field, not just as an analogy. This can be defined as the sum of movements in society concerning finally material processes, which is triggered in modern society by increasing functionalities. One key part of this process is managing future expectations by data analysis and statistical tools, which then leads in industrial and business environments to growth triggered by ‘right’ investments, which means in the sustainability age by sustainable measures. We introduce in this work for the first time an Industrial Application (IA) example that demonstrates and gives the transition path from the recently developed production portfolio theory from Heiden/Markowitz and how to use it in an industrial environment for investment into a sustainable transformation using statistical forecasting tools. The approach introduces the transition strategy of defining investors’ choices characteristics like optimistic, pessimistic or neutral concerning future expectation judgement and risk. This leads in the statistical production portfolio theory framework to economic value and risk landscapes that help judge future investments better. The essential improvement of this method is by using the basic economical method of dynamical investment, the Discounted Cash Flow (DCF) method, and expanding it alongside the economic value dimension with the risk of economic value, which can be regarded as a higher order momentum of the first one, and by this and the portfolio approach as parabolic or quadratic in the solution space of these two dimensions.

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Notes

  1. 1.

    We denote x with the weighting factor of the production-portfolio title and i with the index for the ith one.

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Authors and Affiliations

  1. Carinthia University of Applied Sciences, 9524, Villach, Austria

    Bernhard Heiden & Sabrina Singerl

  2. University of Graz, 8010, Graz, Austria

    Bernhard Heiden & Bianca Tonino-Heiden

  3. Hamburg University of Technology, 21073, Hamburg, Germany

    Volodymyr Alieksieiev

Authors
  1. Bernhard Heiden
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  2. Bianca Tonino-Heiden
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  3. Sabrina Singerl
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  4. Volodymyr Alieksieiev
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Corresponding author

Correspondence to Bernhard Heiden .

Editor information

Editors and Affiliations

  1. Saga University, Saga, Japan

    Kohei Arai

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Heiden, B., Tonino-Heiden, B., Singerl, S., Alieksieiev, V. (2024). Production Portfolio Theory: Risk Evaluation and a New Industrial Application (IA). In: Arai, K. (eds) Advances in Information and Communication. FICC 2024. Lecture Notes in Networks and Systems, vol 919. Springer, Cham. https://doi.org/10.1007/978-3-031-53960-2_42

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