CREATING A CAPEX STRATEGY MODEL
The purpose of creating an economic model is to enable whole-business capex strategy analyses, with many simulations and sensitivity analyses. To create the economic model that encompasses a company’s entire production system requires six major phases:
1. Asset mapping for the base alternative (BA)
2. Cash flows for the BA
3. Strategic building blocks (SBBs)
4. Strategic alternatives (SAs)
5. Sensitivity tests
6. Recommendation for action (RfA)
The whole process is illustrated in Figure 6.1.
The first step is to create the BA. The BA is an analytical starting point modeling the current system’s ability ...
Get Redesigning CapEx Strategy: A Groundbreaking Systems Approach to Sustainably Maximize Company Cash Flow now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
