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Optimization of a Wastewater Treatment Plant Expansion with Flexible Expansion Time

Biyun Zhang

出版	University of Toronto, 2015
URL	http://books.google.com.hk/books?id=9HH2twEACAAJ&hl=&source=gbs_api

註釋

The municipal water and wastewater sector is considered to be one of the most capital intensive industrial sectors. Optimization methods that reduce both capital and operating costs can be of great benefit to this sector. Models using real options approaches to determine the optimal size of a wastewater plant expansion can provide insights that traditional Net Present Value approaches cannot. Previous studies on optimal plant expansion utilizing the real options framework only considered a predetermined expansion time. In this study, we expand on previous work and also utilize the Monte-Carlo simulation technique to consider a wastewater plant expansion in a high growth municipality. In the enhanced model, the date of the decision for the expansion is not a predetermined fixed variable, leading to Bermudan-like Asian option formulation. The results show that a wastewater plant which faces uncertain future demand can benefit from time-flexible modular expansion.