Kendall Power Plant (B): Hedging
3 Pages Posted: 5 Apr 2010
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
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