In the electricity pricing model, we assumed that the capacity level is a decision variable. Assume now

Question:

In the electricity pricing model, we assumed that the capacity level is a decision variable. Assume now that capacity has already been set at 0.65 million of mWh . (Note that the cost of capacity is now a sunk cost, so it is irrelevant to the decision problem.) Change the model appropriately and run Solver. Then use SolverTable to see how sensitive the optimal solution is to the capacity level, letting it vary over some relevant range. Does it appear that the optimal prices will be set so that demand is always equal to capacity for at least one of the two periods of the day?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Business Analytics Data Analysis And Decision Making

ISBN: 1209

6th Edition

Authors: S. Christian Albright, Wayne L. Winston

Question Posted: