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Full-Text Articles in Operations Research, Systems Engineering and Industrial Engineering

Capacity Expansion In The Integrated Supply Network For An Electricity Market, Shan Jin, Sarah M. Ryan Jan 2011

Capacity Expansion In The Integrated Supply Network For An Electricity Market, Shan Jin, Sarah M. Ryan

Industrial and Manufacturing Systems Engineering Publications

Constraints in fuel supply, electricity generation, and transmission interact to affect the welfare of strategic generators and price-sensitive consumers. We consider a mixed integer bilevel programming model in which the leader makes capacity expansion decisions in the fuel transportation, generation, and transmission infrastructure of the electricity supply network to maximize social welfare less investment cost. Based on the leader's expansion decisions, the multiple followers including the fuel suppliers, ISO, and generation companies simultaneously optimize their respective objectives of cost, social welfare, and profit. The bilevel program is formulated as a mathematical program with complementarity constraints. The computational challenge posed ...


Welfare Effects Of Expansions In Equilibrium Models Of An Electricity Market With Fuel Network, Sarah M. Ryan, Anthony Downward, Andrew Philpott, Golbon Zakeri Jan 2010

Welfare Effects Of Expansions In Equilibrium Models Of An Electricity Market With Fuel Network, Sarah M. Ryan, Anthony Downward, Andrew Philpott, Golbon Zakeri

Industrial and Manufacturing Systems Engineering Publications

The welfare of electricity producers and consumers depends on congestion in the transmission grid, generation costs that consist mainly of fuel costs, and strategic behavior. We formulate a game theoretic model of an oligopolistic electricity market where generation costs are derived from a fuel supply network. The game consists of a fuel dispatcher that transports fuels at minimum cost to meet generator demands, generators that maximize profit in Cournot competition, and an independent system operator (ISO) that sets nodal prices to balance electricity supply with linear demand functions. We prove the existence of an equilibrium. If fuel supplies are unlimited ...


Optimal Solution To A Capacity Expansion Problem, Rahul R. Marathe, Sarah M. Ryan Jan 2006

Optimal Solution To A Capacity Expansion Problem, Rahul R. Marathe, Sarah M. Ryan

Industrial and Manufacturing Systems Engineering Conference Proceedings and Posters

For a service provider, stochastic demand growth along with expansion lead times and economies of scale may encourage delaying the start of expansion until after some shortages have been accumulated. Assuming demand follows a geometric Brownian motion, we define the service level in terms of the proportion of demand satisfied, which is then analytically evaluated using financial option pricing theory. Under a stationary expansion policy, an infinite time horizon discounted expansion cost is minimized under the service level constraint, where the expansion timing and size parameters are the decision variables. With the current formulation, the problem seems to be unbounded.


Capacity Expansion For Uncertain Demand With Initial Shortages, Rahul R. Marathe, Sarah M. Ryan Jan 2005

Capacity Expansion For Uncertain Demand With Initial Shortages, Rahul R. Marathe, Sarah M. Ryan

Industrial and Manufacturing Systems Engineering Conference Proceedings and Posters

For service providers, uncertain demand for capacity and expansion lead time may create unavoidable capacity shortages, which may be allowed to accumulate before initiating an expansion. For the demand following a geometric Brownian motion process, we assume a stationary expansion policy where the timing and size of expansion are determined as fixed proportions of the capacity position. We define the service level in terms of the capacity shortages, which can be evaluated by applying pricing formulae for barrier options in finance. We observe the relationship between the two policy parameters at different specified service levels and for other model parameters.


The Effect Of Technological Improvement On Capacity Expansion For Uncertain Exponential Demand With Lead Times, Dohyun Pak, Nattapol Pornsalnuwat, Sarah M. Ryan Jan 2004

The Effect Of Technological Improvement On Capacity Expansion For Uncertain Exponential Demand With Lead Times, Dohyun Pak, Nattapol Pornsalnuwat, Sarah M. Ryan

Industrial and Manufacturing Systems Engineering Publications

We formulate a model of capacity expansion that is relevant to a service provider for whom the cost of capacity shortages would be considerable but difficult to quantify exactly. Due to demand uncertainty and a lead time for adding capacity, not all shortages are avoidable. In addition, technological innovations will reduce the cost of adding capacity but may not be completely predictable. Analytical expressions for the infinite horizon expansion cost and shortages are optimized numerically. Sensitivity analyses allow us to determine the impact of technological change on the optimal timing and sizes of capacity expansions to account for economies of ...