個案總覽

The A case describes the decision the BurMills textile company will make regarding whether to change from producing their own steam to outsourcing their steam production to Intrinergy. BurMills can calculate the present value of cost flows for three alternatives: producing their own steam from burning natural gas, outsourcing to Intrinergy with either a fixed price contract, or with a price contract that floats with the natural gas price at Henry Hub. In addition to the standard costs associated with steam production the case adds depth by providing the possibility of revenue from carbon credits. These credits are earned because the energy in the Intrinergy plant is created from biomass. A proper analysis will include a Monte Carlo simulation based on an arithmetic random walk for carbon credit pricing, a mean-reverting arithmetic random walk for Henry Hub natural gas spot prices, and other distributions. (A student spreadsheet is available to accompany this case.)

Spreadsheet supplement to case UV4312.

This note describes the use of the OptQuest tool (updated July 2009) for optimal decision variable searches based on Crystal Ball Monte Carlo simulations. Setup of the objectives and constraints, selecting run options, saving results, and a simple example are all included.