Optimal Capacity Expansion with Economies of Scale and Growing Demand PDF Download

Author: Anthony M. Marino
Publisher:
ISBN:
Category : Industrial capacity
Languages : en
Pages : 24

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Author: Alan Sussmann Manne
Publisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 254

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Author: John Freidenfelds
Publisher: North-Holland
ISBN:
Category : Business & Economics
Languages : en
Pages : 312

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Author: Missouri Valley Economic Association
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 812

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Author: Rahul Ratnakar Marathe
Publisher:
ISBN:
Category :
Languages : en
Pages : 278

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Book Description
For a service provider, stochastic demand growth along with expansion lead times and economies of scale may complicate a capacity planning problem. We consider a service provider who has to maintain certain minimum level of service and is interested in knowing the optimal timings and sizes of the future capacity expansions. This service level is defined in terms of unsatisfied demand over an expansion cycle. Under this service level constraint, the service provider wants to minimize the infinite time horizon cost of expansion. We assume a stationary policy where the timing and the sizes of the expansions are determined as fixed proportions of the capacity position, where the capacity position is the capacity that will be available when the current expansion is completed. We assume that the demand for the capacity follows a geometric Brownian motion (GBM) process. We discuss a method to check the GBM process fit for any data series representing the demand values and find that the data for electric utility consumption in the US, and the airline passenger enplanement data over a period of 15 years satisfy the assumptions of a GBM process. Using properties of the demand process, we can use financial option pricing theory to express the service level in terms of the decision variables. Particularly, we use the Up-and-Out partial barrier call option price expression to formulate the service level constraint. We use cutting plane algorithm to solve the optimization problem. Numerical optimization shows that it could be optimal to accumulate initial shortage before initiating the next capacity expansions for a low growth; low volatility demand and also when the expansion lead times are shorter. However, when the demand grows at a high rate or is more volatile, it is optimal to start the next expansion project before the demand reaches the current capacity position.

Author: Mohammed H. Dore
Publisher: Routledge
ISBN: 1317557271
Category : Business & Economics
Languages : en
Pages : 162

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Book Description
In dynamic investment planning the time of investment is a significant issue. By simplifying the mathematical notation, the author of this book seeks to make control theory a practical tool that can be applied to the problem of timing. The book, first published in 1977, begins with an introduction to one important approach to control theory – dynamic programming. Then some of the relevant literature that deals with investment decision-making is reviewed. This is followed by a mathematically formulated planning model. The computational aspects of the model are discussed and a complete computer flow chart is given. The second part of the book gives a thorough application of the theory by means of a detailed case study – the planning of a steel industry. The case study illustrates how a fairly abstract dynamic analysis can be effectively integrated with practical decision-making concerns. This book is ideal for students of economics and business.

Author: Alexandar Angelus
Publisher:
ISBN:
Category : Semiconductor industry
Languages : en
Pages : 32

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Book Description
The modular approach to capacity implementation has been proposed in semiconductor manufacturing toaddress the growing difficulty of financing increasingly expensive wafer processing facilities (fabs). In themodular approach, an initial infrastructure is built to accommodate several capacity modules of varying sizes thatwould be added over time in response to realize demand. We develop and characterize the optimal policy for adynamic capacity expansion model, which is of independent interest, to evaluate the promise of the modularapproach. The model includes economies of scale in expansion costs, contingent (dynamic) sizing and timing ofexpansions, and correlated stochastic demand. We then employ this model and a detailed data set representinga modern semiconductor production technology to describe the likely implementation of a modular fab and tonumerically demonstrate a plausible scenario where the modular approach is financially superior.

Author: Ajay Das
Publisher: Routledge
ISBN: 1317503295
Category : Business & Economics
Languages : en
Pages : 803

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Book Description
An Introduction to Operations Management: The Joy of Operations covers the core topics of operations management, including product and service design, processes, capacity planning, forecasting, inventory, quality, supply chain management, and project management. Das provides a clear, connected, and current view of operations management and how it relates to a firm’s strategic goals. Students will benefit from the real-world scenarios that foster an understanding of operations management tasks. Without relying heavily on statistics and mathematical derivations, the book offers applied models and a simple, predictable chapter format to make it easy to navigate. Students of introductory operations management courses will love this practical textbook. A companion website features an instructor’s manual with test questions, as well as additional exercises and examples for in-class use.

Author: Jean Jaskold Gabszewicz
Publisher:
ISBN:
Category :
Languages : en
Pages : 42

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Author: Kenneth D. Frederick
Publisher: Springer Science & Business Media
ISBN: 9401710511
Category : Science
Languages : en
Pages : 450

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Book Description
Global climate change is expected to have major impacts on water resources and aquatic ecosystems. This prospect presents planners, who are already struggling to meet the demands of growing populations and economies, with new challenges. This volume examines these challenges and the resulting conceptual issues for water planning and project evaluation practices. The book is the first attempt to consider whether and how water resources, planning principles and evaluation criteria should be altered in view of the potential impacts of anthropogenically induced climate change. The principles and procedures that are in use today along with new approaches to nonstructural flood plain management, watershed management, water markets, and wetland banking will serve as the basis for the policies and strategies that deal with climate variability and anticipated change. This collection of papers reviews what water management ideas work, which ones need to be changed, and how planners and managers should begin incorporating aspects of risk and uncertainty into management decisions to deal expertly with climate change.