Application of Real Options Analysis to Pond Capacity Expansion Schedule Decision Problems
Date Issued
2009
Date
2009
Author(s)
Wang, Hsin-Ru
Abstract
In hydraulic engineering, there are 3 sub problem in capacity expansion problem, i.e. location, sizing, and scheduling. In the past, the former problems are well known. However, the third problem is searched in a lot of ways of thinking. This research uses the concept of real option method and uncertainty analysis method to develop a numerical model and to simulate the influence of pond expansion scheduling on the benefit. The model includes generation of future rain data, ponds supplying water, and real option analysis. And in the problem of expansion location and expansion sizing, this research uses traditional optimization to solve the problem. his research uses optimization model to solve the problem of location and sizing. The result shows that the benefit is significant. And using the real data to optimization model, one can get the optimal benefit will be almost 60 million, but execute capacity in some condition will have no benefit. Through the real option model one can know that early execute capacity expansion will have more benefit. By adding the 2 model we can analyze capacity expansion problem efficiently.
Subjects
uncertainty analysis
real option
capacity expansion
Type
thesis
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