Choosing Directions for Investments in the Development of Companies Under Uncertainty

Abstract

The problem of choosing investment decisions of companies in the oligopoly market in conditions of uncertainty in demand for products is considered. Investment decisions include the choice of the size and ratio of funds for the implementation of projects of two types: projects to expand production and, accordingly, to increase the supply of products on the market; as well as projects aimed at reducing production costs, which only affect the profitability of production and the free cash flow of companies. We propose an approach based on the joint use of the DCF model and algorithms that describe the investment behavior of companies in the market. The model takes into account the relationship between the choice of investment decisions by companies and the dynamics of the market price. The solution of the problem is reduced to the analysis of a matrix game in which the payoff matrix is formed as a result of numerical simulation. An illustrative example of using the proposed approach is given.