Summary: On Capital Investment
Yossi Azar 1 , Yair Bartal 2 , Esteban Feuerstein 3 , Amos Fiat 1 , Stefano Leonardi 4 and
Adi Ros'en 5
1 Department of Computer Science, Tel Aviv University. x
2 International Computer Science Institute, Berkeley. --
3 Depto. de Computacion, Facultad de Ciencias Exactas y Naturales, Universidad de
Buenos Aires & Instituto de Ciencias, Universidad de General Sarmiento. k
4 International Computer Science Institute, Berkeley, & Dipartimento di Informatica
Sistemistica, Universit`a di Roma ``La Sapienza''. \Lambda\Lambda
5 Department of Computer Science, University of Toronto. yy
Abstract. We deal with the problem of making capital investments in ma­
chines for manufacturing a product. Opportunities for investment occur over
time, every such option consists of a capital cost for a new machine and a re­
sulting productivity gain, i.e., a lower production cost for one unit of product.
The goal is that of minimizing the total production and capital costs when
future demand for the product being produced and investment opportunities
are unknown. This can be viewed as a generalization of the ski­rental problem
and related to the mortgage problem [3].
If all possible capital investments obey the rule that lower production costs
require higher capital investments, then we present an algorithm with constant

Source: Azar, Yossi - School of Computer Science, Tel Aviv University
Fiat, Amos - School of Computer Science, Tel Aviv University

Collections: Computer Technologies and Information Sciences; Physics