lect18- Apply r.v.

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Unformatted text preview: Click to edit Master subtitle style 12/1/10 ISE 460: Engineering Economy University of Southern California Fall 2010 Joseph Chow Week 12: Lecture 18 12/1/10 HW Schedule Summary 12/1/10 22 HW #7, due 11/19/10 Lecture 16 7.1 7.2 Lecture 18 (today) 7.3 Lecture 19 (Thursday) 7.4 12/1/10 Case Study Presentation Randomized Order (11/23, Orde r Team Orde r Team 1 Atia 15 Kung 2 Fischer 16 Shanahan 3 Fulcher 17 Onafalujo 4 Marvasti 18 Liu 5 Walker 19 Chapman and Larocque 6 Kolandjian 20 Karafeizis 7 Bawdekar 21 Ramesh 8 Denari & Blake 22 Johnson 9 Zhou and Lu 23 Fatemi 10 Pottenger 24 Yadav 11 Urruela 25 Martinez 12 Simon, Selby, Sirois 26 Bahadori 12/1/10 33 Italicized names are DEN 12/1/10 Review Prior Deterministic methods of economic analysis Sensitivity analysis, breakeven analysis This Week Stochastic methods of economic analysis incorporating random variables Numerical methods: Monte Carlo simulation 12/1/10 44 12/1/10 Recall Sensitivity Analysis 12/1/10 55 12/1/10 Recall Breakeven Analysis 12/1/10 66 PW of Inflow PW of Outflow 12/1/10 Scenario Analysis 12/1/10 77 Worst case Most likely case Best case NPW-$5,856 $40,169 $104,29 5 ?? ?? Depends on how the input variables are characterized random variables can be used! 12/1/10 Adding Random Variables to Discounted Cash Flows 12/1/10 88 12/1/10 What if Salvage value is a random variable? N = 4 yrs MARR = 10% I = $25,000 O&M = $4,000/yr R = $12,000/yr 12/1/10 99 12/1/10 RECALL: Classes of Distributions: Uniform Continuous a <= x <= b f(x) = 1/(b a), a < x < b, 0 otherwise F(x) = (x a)/(b a), a < x < b; 0 if x...
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lect18- Apply r.v. - Click to edit Master subtitle style...

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