Optimal timing of partial outsourcing decisions
This article combines a real options approach to the optimal timing of outsourcing decisions with a linear programming technique for solving one-dimensional optimal stopping problems. We adopt a partial outsourcing model proposed by Y. Moon (2010) which assumes profit flows to follow a geometric Brownian motion and explicitly takes into account the benets and costs of all eorts which a firm spends on the project prior to the outsourcing date. The problem of deciding when to outsource and how much...