Study On Port Decision With Flexibility Based On Real Option

With the rapid development of economy and trade, there is more and more fierce competition in maritime industry. Port is playing an important role in the development of maritime industry. The operating activities of port have many changes. Therefore, port is often faced with many decision problems. Port flexibility needs port to adapt to the changing market environment, meet customers'requirements with the diversity and personality, so as to improve the port competitiveness. Therefore, it's necessary to do research on the port decision with flexibility.At present, the research on port flexibility at home and abroad is only a few. There are many papers and documents about the research on flexibility. The research on port flexibility is mainly in qualitative description, but it is lack of quantitative research. There aren't any papers and documents that use real option to make port decision with flexibility.The method presented in this paper is real option. Real option is an investment decision-making method that is full account of the investment's uncertainty, irreversibility and management flexibility, and is applicable to high uncertain environment. Real option is a new way of thinking about the future uncertainty.This paper's innovation is to put the flexible thinking into the port, and use real option to make port decision with flexibility. This paper focuses on the flexible production system of port adding the conversion option. It uses binary tree method and dynamic programming method. It builds models for the port's capacity that can provide different types of services economically and effectively. Finally, we analyze an example.