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3. A Procedure for Solving the Optimal Expansion
Problem
development plans using a simulation program, (3) secondary screening of
development plans using a detailed simulation program, and (4) final
screening of development plans using the allocation program. Although
the above approach did not guarantee a minimum-cost solution, it did permit the planner to inject his judgment and experience into the screening
process to approach the minimum-cost solution as closely as he desired. It
also permitted him to eliminate illogical results and provided him with an
opportunity to integrate into the decision-making process those considerations that could not otherwise be expressed in quantitative terms. However, since we are interested in the optimal expansion of a water resources
system and seek an extremum, some other technique of solution must be
applied.
3.1· Strategy of the Optimization Algorithm
An algorithm that takes advantage of the discreteness of the variables
involved in Problem I and views it as a combinatorial problem can be
CAPITAL BUDGETING PROBLEM
Maximize, over all projects and the
time horizon, the discounted present value of net earnings subject to
(1) budgetary and (2) institutional
constraints
Optimal
operating
return of
the system
Number of
dams in the
system
OPERATIONAL POLICY PROBLEM
Maximize the operating return of the system
subject to (1) demand and (2) physical
constraints
Fig. 3.1 Decomposition of the problem of the optimal expansion of a water resources
system.