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Presentation
Engineering Economic Valuation of Ready-Made Design for Transportation Vehicles
Proceedings of NY2019 New York Conferences
  • Zhuoyi Zhao, Iowa State University
  • John Jackman, Iowa State University
  • K. Jo Min, Iowa State University
Document Type
Conference Proceeding
Publication Version
Published Version
Publication Date
1-1-2019
Conference Title
The International New York Conference on Engineering and Technology (NY2019)
Conference Date
November 15-17, 2019
Geolocation
(42.6525793, -73.7562317)
Abstract

Nowadays, transportation vehicles are upfront equipped with fuel saving devices such as winglets in airplanes so as to reduce fuel consumption. By ready-made design, we mean this approaching of equipping upfront on transportation vehicles. In this article, under the reasonable assumption that the fuel cost is volatile and follows a geometric Brownian motion (GBM) process, we use the theory of stochastic optimal control (1) to determine the threshold of fuel cost to decommission such a transportation vehicle, and (2) to determine the engineering economic valuation of such a design. For the threshold and the valuation, we proceed to obtain the analytical solutions to our approach, followed by sensitivity analyses as well as the derivation of the total expected operation lifetime until decommissioning. Finally, for the managerial insights and economic implications, we present an extensive numerical example with numerous empirical data sets from publicly available sources. For instance, as the fuel cost becomes more uncertain, economically rational decision makers will defer the decommissioning of a vehicle.

Comments

This proceeding is published as Zhao, Zhuoyi, John Jackman, and K. Jo Min. "Engineering Economic Valuation of Ready-Made Design for Transportation Vehicles." In: Proceedings of NY2019 New York Conferences. Gul Dagci and Kaan Diyarbakirlioglu, editors. Regional Development Studies Institute Inc., New York, 2019. Pages 23-32. ISBN: 978-0-578-61810-4.

Copyright Owner
Regional Development Studies Institute Inc., New York
Language
en
File Format
application/pdf
Citation Information
Zhuoyi Zhao, John Jackman and K. Jo Min. "Engineering Economic Valuation of Ready-Made Design for Transportation Vehicles" Albany, NYProceedings of NY2019 New York Conferences (2019) p. 23 - 32
Available at: http://works.bepress.com/john_jackman/39/