Flexibility and real options analysis in emergency medical services systems using decision rules and multi-stage stochastic programming

A novel approach to EMS infrastructure systems design, planning, and operations under long-term uncertainty is introduced based on multi-stage stochastic programming and decision rules, accounting for strategic flexibility (also known as real options - RO). Different from standard RO analysis, the approach mimics real-world decision-making by exercising flexibility based on conditional-go decision rules. The objective is to minimize the expected total costs over the system's life cycle, and the outputs are the optimal initial configuration and decision rules. A flexible solution provides lower expected cost than stochastically optimal rigid solutions, especially valuable when required incident coverage rate is >95%. (C) 2017 Elsevier Ltd. All rights reserved.