Optimal decisions on investments in Urban Energy Cogeneration plants – Extended MRP and fuzzy approach to the stochastic systems

Danijel Kovačić, Janez Usenik and Marija Bogataj

International Journal of Production Economics, 2017, vol. 183, issue PB, 583-595

Abstract: The issue of Municipal Solid Waste (MSW) management is an ever increasing problem, especially because solid waste from industry and other Closed-loop Supply Chain Waste (CLSCW) is included in MSW. Dealing with very large amounts of MSW per capita is a global problem, forcing municipalities and industry to develop new systemic approaches and technological solutions. One of the well-accepted solutions is energy recovery from MSW and CLSCW. The Waste-to-Energy (WTE) policy significantly reduces the volume of waste disposed in landfills, influences the reduction of total greenhouse gas emissions, and gives the potential for generating electricity or developing co-generation of electricity and heat. Nevertheless, there are still high uncertainties regarding the optimal decision on investments in cogeneration plants. In this paper we shall not discuss the technical characteristics of plants. Our focus is on the choices regarding investment costs and efficiency which also depend on the uncertain demand for supply system products, which is in correlation with the quantity of waste. In general, the recovered items must be distributed from the recycling facility back to production, and waste items must be sent to landfills, for which taxes and fees have to be paid. Alternatively, waste items can be reversibly used as a source of energy with several technological methods – most commonly the burning process. The uncertain energy efficiency of cogeneration plants and the uncertainty of demand appear simultaneously. In this paper, the methods for supporting decisions in optimal investment or co-investment in the urban cogeneration plant in case of joint actions of local authorities responsible for MSW and CLSC managers is considered when energy efficiency is normally distributed or fuzzy, at volatile demand, which has never been studied jointly. Extended MRP theoretical results are compared to the solutions of fuzzy reasoning. We show how MRP Theory can be used for evaluating the investments, but also how fuzzy reasoning is losing its potential in case of lower demand.

Keywords: Urban Energy Cogeneration Systems; Closed-Loop Supply Chain; Extended MRP Theory; Reverse logistics; Net present value; Municipal solid waste (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:183:y:2017:i:pb:p:583-595

DOI: 10.1016/j.ijpe.2016.02.016

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