Question
The Johnson Energy Company is considering drilling for natural gas in a predominately agricultural area north of Pittsburgh. The company has several locations from within
The Johnson Energy Company is considering drilling for natural gas in a predominately agricultural area north of Pittsburgh. The company has several locations from within the area to choose from. Each location has a different production potential and different level of property owner support (the more support, the less the company has to pay the landowner for rights to use the land). As a profitseeking company, Johnson Energy wants to maximize its gas production potential. Johnson Energy is, however, aware of the controversy surrounding natural gas drilling in Pennsylvania. Thus, they also want to maximize local support. The table below lists the production potential and local property owner support for each site. Production potentials are in millions cubic feet of gas per year, and the firm has measured the local support on a scale from 1 to 10 based on payments and other concessions that would likely be demanded by the landowner
Site | Production Potential | Drilling Cost | Local Support |
A | 86 | 7 | 7 |
B | 54 | 12 | 10 |
C | 64 | 9 | 4 |
D | 140 | 6 | 7 |
E | 110 | 11 | 4 |
F | 210 | 12 | 6 |
G | 180 | 8 | 7 |
H | 165 | 9 | 3 |
I | 175 | 10 | 9 |
Perform a thorough multi-objective decision assessment for the natural gas drilling sites. Your response should include the appropriate description:
a) Identify the Pareto Set of non-dominated alternatives.
b) Using the utility function (value function) method that we discussed in class, define singleattribute utility functions UP, UC, and UL for the production, cost and local support attributes, and include a table with these single-attribute utility functions for all sites in the Pareto Set.
c) Apply the following weights for kp, kc and kl for the production, cost and local support attributes: kp,= 0.4 kc = 0.3 kl = 0.3 d) Use your additive utility function (multi-attribute value function) to find the best site
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