engleski

Risk management for capacity planning in tourist industry

The decision about the specific project realisation is based on the evaluation of its profitability. There are many specific indicators of investment efficiency, but the two of them are dominant by their use, net present value and internal rate of return. The popularity of its use in investment decision making is a result of simplicity of the rules which are based on them, and which could be applied in this process. However, the positive effect of the relatively easy way to calculate them and the simplicity of the interpretation of the calculated values, are reduced by the fact that all these values are the result of the evaluation of the unknown future project results. Every inaccuracy in evaluation of the future values is reflected in these indicators and reduces the applicability of the conclusions based on them. In the investment profitability analysis the different procedures are used with the basic purpose to evaluate the possible variability of the indicator's values from some referential values. The simplest approach is the development of the deterministic model with the presumed input values, and then the output model values are treated by credibility in the same extent in which the inputs are. A further step are the analysis of more input combinations, so called "what-if" simulation, or different scenarios study among which we obligatory include the pessimistic (worst case ) and the optimistic ones (best case). The biggest weakness in such ad hoc approaches is that they don't include different probabilities of the considered cases in the analysis. This paper shows that in such an analysis the deterministic model could be upgraded to the simulation model that makes the risk analysis possible, in a rather simple manner In this approach the input parameters are treated as random variables instead of the deterministic ones. The demonstration of this procedure is based on the real example of the tourist business investment. The deterministic model in spreadsheet EXCEL that gives the basic project profitability indicators (net present value and the internal rate of return) as the outputs, have been developed (see Appendix). Then it is shown how the random variables, modelled by @RISK distribution function, could be used instead of the deterministic input values. It is also shown how these functions are being developed on the basis of knowing the problem domain and how the result of such simulation is used in the project decision making.

tourist industry; capacity planning; Monte Carlo simulation; risk management

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