Title: Managing damaged asset: a case study optimisation between refurbishing and divestiture using capital budgeting in a logistics business in Indonesia

Authors: Effnu Subiyanto; Fitri Ismiyanti; Annisa Farahmei Effnandya

Addresses: Widya Mandala Surabaya Catholic University, Surabaya, Indonesia ' Department of Management, Airlangga University, Surabaya, Indonesia ' Universiti Teknologi Malaysia, 81310 Johor Bahru, Johor, Malaysia

Abstract: This study aims to help practitioners and industries measure their asset optimisation in more detail and consider taking the step of refurbishing or divestiture as an option in operational management. The developed methodology is based on capital budgeting and combines it with several financial ratio considerations. This study found that capital budgeting and several financial ratios are proven tools that help industries make the best decisions between options. Based on econometric calculations, the divestiture option is more advisable than the refurbish scheme. First, this study is scientifically met with the aim of asset optimisation in the logistics sector, but it can be adapted for other types of businesses with adequate adjustments. These findings are practically applicable to help industries make faster decisions. This study contributes to the development of knowledge on global logistics businesses.

Keywords: divestiture; corporate strategy; operation management; logistics; refurbish; capital budgeting; financial ratio; Indonesia.

DOI: 10.1504/IJMDM.2023.129834

International Journal of Management and Decision Making, 2023 Vol.22 No.2, pp.160 - 181

Received: 28 Sep 2021
Accepted: 02 Apr 2022

Published online: 31 Mar 2023 *

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