Business Case Studies & Business Publications

Artemis Controls (C)

Frey, Sherwood C. ...

Case

Artemis Controls (C)

Frey, Sherwood C. Jr.

QA-0758 | Published November 30, 2010 | 2 pages Case

Collection: Darden School of Business

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Avion Chemicals has approached Artemis Controls regarding the purchase of an Artemis smart valve to manage the highly volatile phenol in its production process. Although an existing valve could be used, discussions lead to the possibility of designing a new and potentially much improved valve. Time, engineering, and software constraints make the valve-redesign project a risky endeavor. The A and B cases (UVA-QA-0756 and UVA-QA-0757) permit a basic decision analysis that has been used as an introductory case in decision analysis and as the core material for an exam. The C case presents several sudden changes in the situation that lead to a totally different decision structure and to the requirement for simulation modeling (or some other technique to handle the introduction of continuous uncertainties). This case also has an embedded real option around which an entire class can be built. Because the estimate is continuous, the option problem becomes one of finding the optimal estimated-performance value at which one aborts the software redesign.