We consider a problem commonly faced in industry, involving annual selection of plant capital investments. A typical approach to such a problem uses a multi-knapsack formulation, which takes as input the available budget in each year, the stream of liabilities induced by selecting each project, and the profit, i.e., net present value, of each project. The goal is to select the portfolio of projects with the highest total net present value, while observing the budget constraint for each year, as well as any additional constraints. A portfolio selected in this manner can fail to hedge against uncertainties in the budget, the liability stream and the profit. So, we propose a model that forms an optimal priority list of projects, incorporating multiple scenarios for these input parameters. Our model is not a simplistic ranking scheme. Structural and stochastic dependencies among the projects are key to our approach. We apply our methods on a set of example projects from South Texas Project Nuclear Operating Company.
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ASME 2007 Pressure Vessels and Piping Conference
July 22–26, 2007
San Antonio, Texas, USA
Conference Sponsors:
- Pressure Vessels and Piping Division
ISBN:
0-7918-4285-1
PROCEEDINGS PAPER
Project Prioritization via Optimization
Ali Koc¸,
Ali Koc¸
University of Texas - Austin, Austin, TX
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David Morton,
David Morton
University of Texas - Austin, Austin, TX
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Elmira Popova,
Elmira Popova
University of Texas - Austin, Austin, TX
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Ernie Kee,
Ernie Kee
South Texas Project Nuclear Operating Company, Wadsworth, TX
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Drew Richards,
Drew Richards
South Texas Project Nuclear Operating Company, Wadsworth, TX
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Alice Sun,
Alice Sun
South Texas Project Nuclear Operating Company, Wadsworth, TX
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Stephen Hess
Stephen Hess
Electric Power Research Institute, West Chester, PA
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Ali Koc¸
University of Texas - Austin, Austin, TX
David Morton
University of Texas - Austin, Austin, TX
Elmira Popova
University of Texas - Austin, Austin, TX
Ernie Kee
South Texas Project Nuclear Operating Company, Wadsworth, TX
Drew Richards
South Texas Project Nuclear Operating Company, Wadsworth, TX
Alice Sun
South Texas Project Nuclear Operating Company, Wadsworth, TX
Stephen Hess
Electric Power Research Institute, West Chester, PA
Paper No:
PVP2007-26578, pp. 107-113; 7 pages
Published Online:
August 20, 2009
Citation
Koc¸, A, Morton, D, Popova, E, Kee, E, Richards, D, Sun, A, & Hess, S. "Project Prioritization via Optimization." Proceedings of the ASME 2007 Pressure Vessels and Piping Conference. Volume 7: Operations, Applications and Components. San Antonio, Texas, USA. July 22–26, 2007. pp. 107-113. ASME. https://doi.org/10.1115/PVP2007-26578
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