Kendall Power Plant (B): Hedging

3 Pages Posted: 5 Apr 2010

See all articles by Samuel E. Bodily

Samuel E. Bodily

University of Virginia - Darden School of Business

Miguel Palacio

affiliation not provided to SSRN

Raiford Smith

University of Virginia - Darden School of Business

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

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

Samuel E. Bodily (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

Miguel Palacio

affiliation not provided to SSRN

No Address Available

Raiford Smith

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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