Kendall Power Plant (B): Hedging
3 Pages Posted: 5 Apr 2010
Abstract
The B case adds the possibility of using hedging to manage risks. The impact of hedging on the distribution of profits and particularly its variance is analyzed to understand the value that hedging creates for Spiegel. Students will analyze how hedging reduces risk and find optimal hedging plans using an optimizer such as OptQuest (used with Crystal Ball) or Risk Optimizer (used with @Risk).
Keywords: hedging, Monte Carlo simulation, operations management, pricing, risk analysis, uncertainty, decision trees
Suggested Citation: Suggested Citation
Bodily, Samuel E. and Palacio, Miguel and Smith, Raiford, Kendall Power Plant (B): Hedging. Darden Case No. UVA-QA-0598, Available at SSRN: https://ssrn.com/abstract=1584542 or http://dx.doi.org/10.2139/ssrn.1584542
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