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Unformatted text preview: (100%, 80%, 64%) of the current state. At each state, we would consider: max { no pump, pump, enhanced pump } At each node, you would consider which of the three options yields the largest PV (including the future decisions) 2 At the top node (100) of Year 2, you would consider: max { no pump, pump, enhanced pump } = max { , (100 , 000 * . 2) * 1050 , 000 , (100 , 000 * . 36)120 , 000 } = max { , 150 , 000 , 240 , 000 } = 240 , 000 (enhanced pumping) Continue with all the nodes using the Dynamic Programming Algorithm 5.9b The maximum present value is $366,740. The strategy is to have Enhanced Pumping for the ﬁrst two years and normal pumping for the last year. 3...
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This note was uploaded on 04/20/2011 for the course MIE 375 taught by Professor R.kwon during the Spring '11 term at University of Toronto Toronto.
 Spring '11
 R.KWON

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