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Full-Text Articles in Engineering

Three-Dimensional Container Loading: A Simulated Annealing Approach, Hanan Mostaghimi Ghomi, Bryan Gary St. Amour, Walid Abdul-Kader Jan 2017

Three-Dimensional Container Loading: A Simulated Annealing Approach, Hanan Mostaghimi Ghomi, Bryan Gary St. Amour, Walid Abdul-Kader

Industrial and Manufacturing Systems Engineering Publications

High utilization of cargo volume is an essential factor in the success of modern enterprises in the market. Although mathematical models have been presented for container loading problems in the literature, there is still a lack of studies that consider practical constraints. In this paper, a Mixed Integer Linear Programming is developed for the problem of packing a subset of rectangular boxes inside a container such that the total value of the packed boxes is maximized while some realistic constraints, such as vertical stability, are considered. The packing is orthogonal, and the boxes can be freely rotated into any of …


Effect Of Gap Flow On The Shallow Wake Of A Sharp-Edged Bluff Body – Turbulence Parameters, A.M Shinneeb, R. Balachandar Aug 2016

Effect Of Gap Flow On The Shallow Wake Of A Sharp-Edged Bluff Body – Turbulence Parameters, A.M Shinneeb, R. Balachandar

Civil and Environmental Engineering Publications

This experimental study was carried out to investigate the turbulent wake generated by a vertical sharp-edged flat plate suspended in a shallow channel flow with a gap near the bed. The objective of this study is to understand the effect of the gap flow on the turbulent wake by studying two different gap heights between the channel bed and the bottom edge of the bluff body. These two cases were compared to the no-gap case which is considered as a reference case. The maximum flow velocity was 0.45 m/s and the Reynolds number based on the water depthwas 45,000. Extensivemeasurements …


Optimal Disposition Decisions For A Remanufacturing System Considering Time Value Of Products, Mostafa Pazoki, Walid Abdul-Kader Jul 2016

Optimal Disposition Decisions For A Remanufacturing System Considering Time Value Of Products, Mostafa Pazoki, Walid Abdul-Kader

Industrial and Manufacturing Systems Engineering Publications

This paper studies disposition decisions of cores where the value of returns deteriorates over time. Mainly in disposition decisions, a remanufacturer is interested to determine how many units to remanufacture and to salvage. To address this research problem along with value deterioration of returns, a rough-cut mathematical model is developed by considering various parameters of interest such as selling price, salvage value and remanufacturing rate with the aim to maximize total profit. Due to uncertainty limitations, the model can provide decision-makers with relevant insights about disposition decisions. Simulation modeling techniques are used to validate the proposed model. Numerical examples are …


An Integrated Strategy For A Production Planning And Warehouse Layout Problem: Modeling And Solution Approaches, Guoqing Zhang, Tatsushi Nishi, Sarina D. O. Turner, Keisuke Oga, Xindan Li Jun 2016

An Integrated Strategy For A Production Planning And Warehouse Layout Problem: Modeling And Solution Approaches, Guoqing Zhang, Tatsushi Nishi, Sarina D. O. Turner, Keisuke Oga, Xindan Li

Mechanical, Automotive & Materials Engineering Publications

We study a real-world production warehousing case, where the company always faces the challenge to find available space for their products and to manage the items in the warehouse. To resolve the problem, an integrated strategy that combines warehouse layout with the capacitated lot-sizing problem is presented, which have been traditionally treated separately in the existing literature. We develop a mixed integer linear programming model to formulate the integrated optimization problem with the objective of minimizing the total cost of production and warehouse operations. The problem with real data is a large-scale instance that is beyond the capability of optimization …


Mean Characteristics Of Fluid Structures In Shallow-Wake Flows, Ram Balachandar Jan 2016

Mean Characteristics Of Fluid Structures In Shallow-Wake Flows, Ram Balachandar

Civil and Environmental Engineering Publications

An enhanced picture of the formation of fluid structures including the effect of the free surface and the bed is captured via a numerical solution of flow past a bed mounted bluffbody. A numerical comparison for the fluid structures observed in a time-averaged field of the shallow-wake flow behind a bluffbody utilizing the rigid-lid assumption and volume of fluid method is carried out in this study to bring forth the shortcomings in previous studies. The transient three-dimensional governing Navier–Stokes equations are computationally solved using a finite volume technique with Detached Eddy Simulation as a turbu- lence model. A flat wave …


Optimal Configuration Of Remanufacturing Supply Network With Return Quality Decision, Mohannad Radhi, Guoqing Zhang Sep 2015

Optimal Configuration Of Remanufacturing Supply Network With Return Quality Decision, Mohannad Radhi, Guoqing Zhang

Mechanical, Automotive & Materials Engineering Publications

No abstract provided.


Effect Of Gap Flow On The Shallow Wake Of A Sharp-Edged Bluff Body –Mean Velocity Fields, A.M Shinneeb, R. Balachandar Aug 2015

Effect Of Gap Flow On The Shallow Wake Of A Sharp-Edged Bluff Body –Mean Velocity Fields, A.M Shinneeb, R. Balachandar

Civil and Environmental Engineering Publications

This experimental study was carried out to investigate the turbulent shallow wake generated by a vertical sharp-edged flat plate suspended in a shallow channel flow with a gap near the bed. The objective of this study is to understand the effect of the gap flow on the wake by studying two different gap heights between the channel bed and the bottom edge of the bluff body. These two cases will be compared to the no-gap case which is considered as a reference case. Themaximumflowvelocity was 0.45m/s and the Reynolds number based on the water depthwas 45,000. Extensivemeasurements of the flowfield …


Efficient Residuals Pre-Processing For Diagnosing Multi-Class Faults In A Doubly Fed Induction Generator, Under Missing Data Scenarios, Roozbeh Razavi-Far, Enrico Zio, Vasile Palade Oct 2014

Efficient Residuals Pre-Processing For Diagnosing Multi-Class Faults In A Doubly Fed Induction Generator, Under Missing Data Scenarios, Roozbeh Razavi-Far, Enrico Zio, Vasile Palade

Electrical and Computer Engineering Publications

This paper focuses on the development of a pre-processing module to generate the latent residuals for sensor fault diagnosis in a doubly fed induction generator of a wind turbine. The pre-processing module bridges a gap between the residual generation and decision modules. The inputs of the pre-processing module are batches of residuals generated by a combined set of observers that are robust to operating point changes. The outputs of the pre-processing module are the latent residuals which are progressively fed into the decision module, a dynamic weighting ensemble of fault classifiers that incrementally learns the residuals-faults relationships and dynamically classifies …


Residential Solar Air Conditioning: Energy And Exergy Analyses Of An Ammonia-Water Absorption Cooling System, Julia Aman, David S-K Ting, Paul Henshaw Jan 2014

Residential Solar Air Conditioning: Energy And Exergy Analyses Of An Ammonia-Water Absorption Cooling System, Julia Aman, David S-K Ting, Paul Henshaw

Mechanical, Automotive & Materials Engineering Publications

Large scale heat-driven absorption cooling systems are available in the marketplace for industrial applications but the concept of a solar driven absorption chiller for air-conditioning applications is relatively new. Absorption chillers have a lower efficiency than compression refrigeration systems, when used for small scale applications and this restrains the absorption cooling system from air conditioning applications in residential buildings. The potential of a solar driven ammonia-water absorption chiller for residential air conditioning application is discussed and analyzed in this paper. A thermodynamic model has been developed based on a 10 kW air cooled ammonia-water absorption chiller driven by solar thermal …


A Multi-Objective Facility Location Model For Closed-Loop Supply Chain Network Under Uncertain Demand And Return, Saman Hassanzadeh Amin, Guoqing Zhang Mar 2013

A Multi-Objective Facility Location Model For Closed-Loop Supply Chain Network Under Uncertain Demand And Return, Saman Hassanzadeh Amin, Guoqing Zhang

Mechanical, Automotive & Materials Engineering Publications

A closed-loop supply chain (CLSC) network consists of both forward and reverse supply chains. In this paper, a CLSC network is investigated which includes multiple plants, collection centres, demand markets, and products. To this aim, a mixed-integer linear programming model is proposed that minimizes the total cost. Besides, two test problems are examined. The model is extended to consider environmental factors by weighed sums and ε-constraint methods. In addition, we investigate the impact of demand and return uncertainties on the network configuration by stochastic programming (scenario-based). Computational results show that the model can handle demand and return uncertainties, simultaneously.


A Three-Stage Model For Closed-Loop Supply Chain Configuration Under Uncertainty, Saman Hassanzadeh Amin, Guoqing Zhang Jan 2013

A Three-Stage Model For Closed-Loop Supply Chain Configuration Under Uncertainty, Saman Hassanzadeh Amin, Guoqing Zhang

Mechanical, Automotive & Materials Engineering Publications

In this paper, a general closed-loop supply chain (CLSC) network is configured which consists of multiple customers, parts, products, suppliers, remanufacturing subcontractors, and refurbishing sites. We propose a three-stage model including evaluation, network configuration, and selection and order allocation. In the first stage, suppliers, remanufacturing subcontractors, and refurbishing sites are evaluated based on a new quality function deployment (QFD) model. The proposed QFD model determines the relationship between customer requirements, part requirements, and process requirements. In addition, the fuzzy sets theory is utilised to overcome the uncertainty in the decision-making process. In the second stage, the closed-loop supply chain network …


A Proposed Mathematical Model For Closed-Loop Network Configuration Based On Product Life Cycle, Saman Hassanzadeh Amin, Guoqing Zhang Jan 2012

A Proposed Mathematical Model For Closed-Loop Network Configuration Based On Product Life Cycle, Saman Hassanzadeh Amin, Guoqing Zhang

Mechanical, Automotive & Materials Engineering Publications

Products may be returned over their life cycle. Industrial experiences show that there are three main return–recovery pairs. Commercial returns are repaired. End-of-use returns often are remanufactured. In addition, end-of-life returns are recycled. However, up to now, no optimization model is proposed for closed-loop configuration based on three return–recovery pairs. The repaired and remanufactured products can be sold in the same or secondary market. In this paper, we design and configure a general closed-loop supply chain network based on product life cycle. The network includes a manufacturer, collection, repair, disassembly, recycling, and disposal sites. The returned products are collected in …


Bagged Ensemble Of Fuzzy C-Means Classifiers For Nuclear Transient Identification, Piero Baraldi, Roozbeh Razavi-Far, Enrico Zio May 2011

Bagged Ensemble Of Fuzzy C-Means Classifiers For Nuclear Transient Identification, Piero Baraldi, Roozbeh Razavi-Far, Enrico Zio

Electrical and Computer Engineering Publications

This paper presents an ensemble-based scheme for nuclear transient identification. The approach adopted to construct the ensemble of classifiers is bagging; the novelty consists in using supervised fuzzy C-means (FCM) classifiers as base classifiers of the ensemble. The performance of the proposed classification scheme has been verified by comparison with a single supervised, evolutionary-optimized FCM classifier with respect of the task of classifying artificial datasets. The results obtained indicate that in the cases of datasets of large or very small sizes and/or complex decision boundaries, the bagging ensembles can improve classification accuracy. Then, the approach has been applied to the …


Classifier-Ensemble Incremental-Learning Procedure For Nuclear Transient Identification At Different Operational Conditions, Piero Baraldi, Roozbeh Razavi-Far, Enrico Zio Apr 2011

Classifier-Ensemble Incremental-Learning Procedure For Nuclear Transient Identification At Different Operational Conditions, Piero Baraldi, Roozbeh Razavi-Far, Enrico Zio

Electrical and Computer Engineering Publications

An important requirement for the practical implementation of empirical diagnostic systems is the capability of classifying transients in all plant operational conditions. The present paper proposes an approach based on an ensemble of classifiers for incrementally learning transients under different operational conditions. New classifiers are added to the ensemble where transients occurring in new operational conditions are not satisfactorily classified. The construction of the ensemble is made by bagging; the base classifier is a supervised Fuzzy C Means (FCM) classifier whose outcomes are combined by majority voting. The incremental learning procedure is applied to the identification of simulated transients in …


Optimal Production Planning For A Multi-Product Closed Loop System With Uncertain Demand And Return, Jianmai Shi, Guoqing Zhang, Jichang Sha Mar 2011

Optimal Production Planning For A Multi-Product Closed Loop System With Uncertain Demand And Return, Jianmai Shi, Guoqing Zhang, Jichang Sha

Mechanical, Automotive & Materials Engineering Publications

We study the production planning problem for a multi-product closed loop system, in which the manufacturer has two channels for supplying products: producing brand-new products and remanufacturing returns into as-new ones. In the remanufacturing process, used products are bought back and remanufactured into as-new products which are sold together with the brand-new ones. The demands for all the products are uncertain, and their returns are uncertain and price-sensitive. The problem is to maximize the manufacturer's expected profit by jointly determining the production quantities of brand-new products, the quantities of remanufactured products and the acquisition prices of the used products, subject …


Coordinating Production And Recycling Decisions With Stochastic Demand And Return, Jianmai Shi, Guoqing Zhang, Jichang Sha, Saman Hassanzadeh Amin Dec 2010

Coordinating Production And Recycling Decisions With Stochastic Demand And Return, Jianmai Shi, Guoqing Zhang, Jichang Sha, Saman Hassanzadeh Amin

Mechanical, Automotive & Materials Engineering Publications

In this paper, the joint production and recycling problem is investigated for a hybrid manufacturing and remanufacturing system where brand-new products are produced in the manufacturing plant and recycled products are remanufactured into as-new products in the remanufacturing facility. Both the brand-new products and remanufactured products are used to satisfy customer demands. Returns of used products that are recycled from customers are assumed to be stochastic and nonlinearly price-dependent. A mathematical model is proposed to maximize the overall profit of the system through simultaneously optimizing the production and recycling decisions, subject to two capacity constraints — the manufacturing capacity and …


Multi-Product Budget-Constrained Acquistion And Pricing With Uncertain Demand And Supplier Quantity Discounts, Jianmai Shi, Guoqing Zhang Nov 2010

Multi-Product Budget-Constrained Acquistion And Pricing With Uncertain Demand And Supplier Quantity Discounts, Jianmai Shi, Guoqing Zhang

Mechanical, Automotive & Materials Engineering Publications

We consider the joint acquisition and pricing problem where the retailer sells multiple products with uncertain demands and the suppliers provide all unit quantity discounts.The problem is to determine the optimal acquisition quantities and selling prices so as to maximize the retailer’s expected profit, subject to a budget constraint. This is the first extension to consider supplier discounts in the constrained multi-product newsvendor pricing problem. We establish a mixed integer nonlinear programming (MINLP) model to formulate the problem, and developaLagrangian based solution approach.Computational results for the test problems involving up to thousand products are reported, which show that the Lagrangian …


Analysis, Modeling And Imporvement Of Stamped Parts Quality Using Generalized Linear Models, Foad Hassanmirzaei, Zbigniew Pasek Jan 2010

Analysis, Modeling And Imporvement Of Stamped Parts Quality Using Generalized Linear Models, Foad Hassanmirzaei, Zbigniew Pasek

Industrial and Manufacturing Systems Engineering Publications

This paper presents an approach used for improving the visual quality of body panels produced in an automated press shop of a car manufacturer. To solve the complexproblem of panels’ visual defects,the optimal values of process parameters based on Generalized Linear Models (GLZ) were identified and deployed. The project focused on parts exhibiting excessive rejection rates. To deal effectively with the case in which the distribution function representing the number of defects in the panels was found to be binomial with presence of some covariates in the model, the research approach focused on development of Log it Models.

After identifying …


An Automatic Calibration Method For Stereo-Based 3d Distributed Smart Camera Networks, Aaron Mavrinac, Xiang Chen, Kemal Tepe Jan 2010

An Automatic Calibration Method For Stereo-Based 3d Distributed Smart Camera Networks, Aaron Mavrinac, Xiang Chen, Kemal Tepe

Electrical and Computer Engineering Publications

Stereo-based 3D distributed smart camera networks are useful in a broad range of applications. Knowledge of the relative locations and orientations of nodes in the network is an essential prerequisite for true 3D sensing. A novel spatial calibration method for a network of pre-calibrated stereo smart cameras is presented, which obtains pose estimates suitable for collaborative 3D vision in a distributed fashion using two stages of registration on robust 3D point sets. The method is initially described in a geometrical sense, then presented in a practical implementation using existing vision and registration algorithms. Experiments using both software simulations and physical …


Design And Implementation Of A Testbed For Ieee 802.15.4 (Zigbee) Performance Measurements, Patrickr Casey, Kemal Tepe, Narayan Kar Jan 2010

Design And Implementation Of A Testbed For Ieee 802.15.4 (Zigbee) Performance Measurements, Patrickr Casey, Kemal Tepe, Narayan Kar

Electrical and Computer Engineering Publications

IEEE 802.15.4, commonly known as ZigBee, is a Media Access Control (MAC) and physical layer standard specifically designed for short range wireless communication where low rate, low power, and low bandwidth are required. This makes ZigBee an ideal choice when it comes to sensor networks for monitoring data collection and/or triggering process responses. However, these very characteristics bring into question ZigBee's ability to perform reliably in harsh environments. This paper thoroughly explains the experimental testbed setup and execution to demonstrate ZigBee's performance in several practical applications. This testbed is capable of measuring the minimum, maximum, and average received signal strength …


A Novel Real-Time Mac Layer Protocol For Wireless Sensor Network Applications, B.K. Singh, Kemal Tepe Jan 2009

A Novel Real-Time Mac Layer Protocol For Wireless Sensor Network Applications, B.K. Singh, Kemal Tepe

Electrical and Computer Engineering Publications

This paper presents a comparative study of existing real-time MAC layer protocols for wireless sensor networks. Then, a new real-Time MAC protocol is presented that is based on a general purpose MAC protocol, called S-MAC. While medium access strategy in S-MAC is based on contention and back-off schemes, protocol proposed in this paper uses feedback approach as a medium access strategy. As a result of this, it increases consistency in data transmission pattern, which enables it to guarantee end-to-end delay deadlines for soft realtime applications. Proposed protocol works in continuous ON mode of operation at MAC layer and is intended …


Game Theoretic Approach In Routing Protocol For Wireless Ad Hoc Networks, Mohammad Naserian, Kemal Tepe Jan 2009

Game Theoretic Approach In Routing Protocol For Wireless Ad Hoc Networks, Mohammad Naserian, Kemal Tepe

Electrical and Computer Engineering Publications

This paper introduces a game theoretic method, called forwarding dilemma game (FDG), which controls routing overhead in dense multi-hop wireless ad hoc networks. The players of the game are the wireless nodes with set of strategies {Forward, Not forward}. The game is played whenever an arbitrary node in the network receives a flooding packet. In FDG, every player needs to know the number of players of the game. That is why a neighbor discovery protocol (NDP) is introduced. In order for NDP to function, a field is attached to the flooding packets (routing overhead packets). The mixed strategy Nash equilibrium …


Feature-Based Calibration Of Distributed Smart Stereo Camera Networks, Aaron Mavrinac, Xiang Chen, Kemal Tepe Jan 2008

Feature-Based Calibration Of Distributed Smart Stereo Camera Networks, Aaron Mavrinac, Xiang Chen, Kemal Tepe

Electrical and Computer Engineering Publications

A distributed smart camera network is a collective of vision-capable devices with enough processing power to execute algorithms for collaborative vision tasks. A true 3D sensing network applies to a broad range of applications, and local stereo vision capabilities at each node offer the potential for a particularly robust implementation. A novel spatial calibration method for such a network is presented, which obtains pose estimates suitable for collaborative 3D vision in a distributed fashion using two stages of registration on robust 3D features. The method is initially described in a geometrical sense, then presented in a practical implementation using existing …


Simulation-Based Verification Of Lean Improvement For Emergency Room Process, Nancy Khurma, Gheorghe M. Bacioiu, Zbigniew J. Pasek Jan 2008

Simulation-Based Verification Of Lean Improvement For Emergency Room Process, Nancy Khurma, Gheorghe M. Bacioiu, Zbigniew J. Pasek

Industrial and Manufacturing Systems Engineering Publications

One of the key challenges to health care access in Canadian hospitals is growing overcrowding of the Emergency Departments (EDs), leading to the medical personnel overload, and the excessive waiting times to receive proper care. These adverse effects directly impact the patient satisfaction levels, the ability of the medical professionals to attend promptly to patients' health issues, and generate unnecessary costs. Addressing the sources of waste and improving the process provides better care and higher patient satisfaction, as well as increases operational efficiency and the ability of the medical professionals to intervene on time. This paper describes an effort aimed …


An Approach To Line Balancing On Virtual Supervisor Induction Method And Intelligent Agents, J. Trujillo, P. Pawlewski, Zbigniew Pasek, P. Golinska, E. Baeyens, J. Oleskov Jan 2007

An Approach To Line Balancing On Virtual Supervisor Induction Method And Intelligent Agents, J. Trujillo, P. Pawlewski, Zbigniew Pasek, P. Golinska, E. Baeyens, J. Oleskov

Industrial and Manufacturing Systems Engineering Publications

This approach develops a method for solving the line-balancing problem, which is based on two stages. The works in a first stage is to identify the task of workstation, the assignment of the tasks to stations on the line and the recognized balance delay. In this stage we propose the induction VS method, which allows further identify the exact position between pieces, machine into a workstation and also between extern workstation, as well as intracellular and intercellular part. This way each task is identified and measured. In the second stage is to carry out a macro-approach to choose the resource …


Competitive Learning Techniques For Color Image Segmentation, Aaron Mavrinac, Jonathan Wu, Xiang Chen, Kemal Tepe Jan 2007

Competitive Learning Techniques For Color Image Segmentation, Aaron Mavrinac, Jonathan Wu, Xiang Chen, Kemal Tepe

Electrical and Computer Engineering Publications

A method for color image segmentation using a competitive learning clustering scheme is examined, and some basic improvements are made. Two important aspects of the color image segmentation problem, namely color space selection and over segmentation, are discussed in the context of the algorithm, with comments about suitability and effectiveness of choices for various applications. A variety of settings are tested and compared to highlight performance.


On-Line Scheduling Method Of Manufacturing System Based On Vs Algorithm For Reference Pattern, J. A. Trujillo, Clemente Cárdenas, Zbigniew Pasek, Enrique Baeyens Jan 2006

On-Line Scheduling Method Of Manufacturing System Based On Vs Algorithm For Reference Pattern, J. A. Trujillo, Clemente Cárdenas, Zbigniew Pasek, Enrique Baeyens

Industrial and Manufacturing Systems Engineering Publications

In this paper, a scheduling method is developed provide planning for manufacturing plants with multiple coordinating cells. The controls for reconfigurable manufacturing systems have to be capable not only of identifying exceptions on-line, but also simultaneously developing on-line strategies for unpredictable customer order changes or inaccurate estimate of processing times. The approach exploits virtual supervisor (VS) concept developing an algorithm which provides access to all system information during program execution and thus can readily monitor the overall system performance creating reference pattern. The goal is to minimize expected costs of part tardiness and/or earliness. A solution methodology based on a …


On-Line Job-Shop Scheduling Of A Manufacturing System Based On A Virtual Supervisor Concept, Jesús Trujillo, Zbigniew Pasek, Enrique Baeyens Jan 2005

On-Line Job-Shop Scheduling Of A Manufacturing System Based On A Virtual Supervisor Concept, Jesús Trujillo, Zbigniew Pasek, Enrique Baeyens

Industrial and Manufacturing Systems Engineering Publications

The controls for reconfigurable manufacturing systems have to be capable not only of identifying exceptions on-line, but also simultaneously developing on-line strategies for unpredictable customer orders or inaccurate estimates of processing times. This paper presents an approach for job-shop scheduling with uncertain arrival times. The approach exploits Virtual Supervisor (VS) concept, which provides access to all system information during program execution and thus can readily monitor the overall system performance. The goal is to minimize expected part tardiness and earliness cost. A solution methodology based on a combined Lagrangian relaxation, VS-Patterns, Maxwell equations and temporal difference is developed to obtain …


Applying Unbalanced Rsa To Authentication And Key Distribution In 802.11, Zhong Zheng, Kemal Tepe, Huapeng Wu Jan 2005

Applying Unbalanced Rsa To Authentication And Key Distribution In 802.11, Zhong Zheng, Kemal Tepe, Huapeng Wu

Electrical and Computer Engineering Publications

It is well known that the data confidentiality algorithm, called Wired Equivalent Privacy (WEP), offerred by the original IEEE 802.11 is not secure mainly due to its improper implementation of RC4 algorithm [3], [4]. The IEEE 802.11 Task Group ’I’ (TGi) has designed two options to address this problem. One is called Temporal Key Integrity Protocol (TKIP), intended to be used as a short-term patch for currently deployed equipment. The other one uses Advanced Encryption Standard (AES), a powerful block cipher recommended by NIST to replace DES in 2000, as a long-term solution


A New Methodology To Evaluate The Real Options Of An Investment Using Binomial Trees And Monte Carlo Simulations, Michele Amico, Zbigniew Pasek, Farshid Asl Jan 2003

A New Methodology To Evaluate The Real Options Of An Investment Using Binomial Trees And Monte Carlo Simulations, Michele Amico, Zbigniew Pasek, Farshid Asl

Industrial and Manufacturing Systems Engineering Publications

This paper deals with a new methodology to evaluate the real operating options embedded in a manufacturing system investment. In a single product framework, the demand is assumed as the main source of uncertainty, therefore as a stochastic variable following a geometric brownian motion (GBM). Then, focusing on the real option to expand the capacity at a certain time in the future, we have developed a new approach for the option payoff, looking forward in the time interval from the expansion date to the end of the planning horizon. The payoff function is the expected net present value (NPV), at …