Date of Award

2017

Publisher

North Dakota State University

Document Type

Thesis

Degree Awarded

Master of Science (MS)

Program

Agribusiness and Applied Economics

Department

Agribusiness and Applied Economics

College

Agriculture, Food Systems and Natural Resources

Faculty Advisor

Wilson, William W.

Description

Grain shipping for a country elevator involves many sources of risk and uncertainty. In response to these dynamic challenges faced by shippers, railroad carriers offer various types of forward contracting instruments and shuttle programs. Certain contracting instruments provide managerial flexibility by allowing shippers to sell excess railcars into a secondary market. The purpose of this study is to value this transferability as a European put option. A framework is developed around a material requirement planning schedule and real option analysis to represent the strategic decisions facing a primary shuttle contract owner. Monte Carlo simulation is incorporated with a stochastic binomial option pricing model to value the transfer option. A sensitivity analysis is then conducted to determine the impact of key input variables. This study provides insights about railcar ordering strategy, and the implications of transferable rail contracts for shippers and carriers.

Rights

NDSU policy 190.6.2

Rights Link

https://www.ndsu.edu/fileadmin/policy/190.pdf

Author ORCID Identifier

0000-0003-3943-5581

Handle Identifier

https://hdl.handle.net/10365/28647

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