Campus Units

Industrial and Manufacturing Systems Engineering

Document Type

Conference Proceeding

Publication Version

Published Version

Publication Date

6-2016

DOI

10.18260/p.26598

Conference Title

2016 ASEE Annual Conference & Exposition

Conference Date

June 26-28, 2016

City

New Orleans, LA

Abstract

In this paper, we first describe how critical life-cycle decisions are made for projects facing significant uncertainties. The key differentiating aspect of our approach from the traditional net present value approach is regarding the timing of such decisions. For example, our emphasis is on the effective dates for the commencement and expiration (i.e., a window of opportunity) for possible actions regarding a project, which is clearly above and beyond a single shot decision of investment or no investment. Our approach is based on elementary stochastic optimal control methods, which often afford closed-form solutions on critical timing information such as the expected remaining life of a project under significant uncertainties. These analytic solutions provide managerial insights and economic implications that are simply absent in numerical results under particular sets of parameter values. We next show how we integrate our approach in a traditional engineering economy course utilizing a short, self-contained module of a few lectures. The context of the lectures is the decisions by wind farms to exit and/or enter. For this module, we administer pre- and post- tests as well as self-efficacy surveys. In addition, focus groups are utilized to obtain immediate feedback in an interactive manner. The results from the assessment of outcomes and the self-efficacy surveys, as well as the feedback from focus groups are presented. Finally, subsequent steps towards improved teaching and learning in life-cycle decision making for projects under uncertainty are outlined.

Comments

This is a proceeding from the ASEE Annual Conference & Exposition (2016): doi:10.18260/p.26598. Posted with permission.

Copyright Owner

ASEE

Language

en

File Format

application/pdf

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