Analysis of economic-financial viability, by the monte carlo method, in service provider of non-destructible tests: case study

This work aims to present the economic-financial feasibility, through the application of the Monte Carlo Method, to assist managers in the decision making regarding the investment of a service contract of a company specialized in Non-Destructive Tests, with the tests of Penetrant Liquid and Ultrasound, to which the company that takes the service establishes the requirements previously. The method was apply, in 5000 iterations, from the established parameters, for the initial investment and demand of the test diaries, which provided data regarding the average for the Net Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index (PI), as well as the possible standard deviations, established by the coefficient of variation. Finally, after analyzing the data, it was check that the Method is useful to assist in the making of investment decisions, being feasible the adherence of the contract studied, through the analyzed data and established criteria.

Download Full-text

Modelling and numerical assessment of a maintenance strategy with stock through piecewise deterministic Markov processes and quasi Monte Carlo methods

Proceedings of the Institution of Mechanical Engineers Part O Journal of Risk and Reliability ◽

10.1177/1748006x17712121 ◽

2017 ◽

Vol 231 (4) ◽

pp. 429-445

Author(s):

Jeanne Demgne ◽

Sophie Mercier ◽

William Lair ◽

Jérôme Lonchampt

Keyword(s):

Monte Carlo ◽

Monte Carlo Method ◽

Markov Processes ◽

Net Present Value ◽

Spare Parts ◽

Present Value ◽

Quasi Monte Carlo ◽

The Monte Carlo Method ◽

Piecewise Deterministic Markov Processes ◽

The Right

To ensure a power generation level, the French national electricity supply (EDF) has to manage its producing assets by putting in place adapted preventive maintenance strategies. In this article, a fleet of identical components is considered, which are spread out all around France (one per power plant site). The components are assumed to have stochastically independent lifetimes, but they are made functionally dependent through the sharing of a common stock of spare parts. When available, these spare parts are used for both corrective and preventive replacements, with priority to corrective replacements. When the stock is empty, replacements are delayed until the arrival of new spare parts. These spare parts are expensive, and their manufacturing time is long, which makes it necessary to rigorously define their ordering process. The point of the article is to provide the decision maker with the tools to take the right decision (make or not the overhaul). To do that, two indicators are proposed, which are based on an economic variable called the net present value. The net present value stands for the difference between the cumulated discounted cash-flows of the purely corrective policy and the preventive one which including the overhaul. Piecewise deterministic Markov processes are first considered for the joint modelling of the stochastic evolution of the components, stock and ordering process with and without overhaul. The indicators are next expressed with respect to these piecewise deterministic Markov processes, which have to be numerically assessed. Instead of using the most classical Monte Carlo simulations, we here suggest alternate methods based on quasi Monte Carlo simulations, which replace the random uniform numbers of the Monte Carlo method by deterministic sequences called low-discrepancy sequences. The obtained results show a real gain of the quasi Monte Carlo methods in comparison with the Monte Carlo method. The developed tools can hence help the decision maker to take the right decision.

Download Full-text

Análise dos Riscos em Projetos: Uma Aplicação do Método de Monte Carlo em uma Empresa do Setor Moveleiro

Future Studies Research Journal Trends and Strategies ◽

10.24023/futurejournal/2175-5825/2018.v10i2.314 ◽

2018 ◽

Vol 10 (2) ◽

pp. 332-357

Author(s):

Fernando Rodrigues de Amorim ◽

Pedro Henrique Camargo de Abreu ◽

Marco Tulio Ospina Patino ◽

Leonardo Augusto Amaral Terra

Keyword(s):

Monte Carlo ◽

Investment Project ◽

Modern Society ◽

Exploratory Research ◽

Investment Projects ◽

A Value ◽

The Monte Carlo Method ◽

Monte Carlo Em ◽

A Company

Globalization is a phenomenon that is present in modern society and, with its expansion, it is essential that companies can meet the constant demands of the market, but for this, it is necessary to make the best decisions and deal with various adversities related to the economy, competition, management, among others. The success of investment projects is determined by a set of techniques that must be applied so as not to compromise the viability of the project. When this viability is surrounded by uncertainties, a useful alternative to knowing the risks is the use of the Monte Carlo method. The present work aims to address the risk factors in a company of the furniture sector, using the Monte Carlo simulation to analyze the viability of this project. The methodology adopted was developed from a case study, through an exploratory research. The results showed that the investment project is viable, estimating a return between the 4th and 5th year of the project, in addition, the balance after the 10 years of investment would be around R$ 4,128,211.63, a value that represents 161.25% of the initial investment.

Download Full-text

Net Present Value and Internal Rate of Return as indicators for assessment of cost-efficiency of poplar plantations: a Serbian case study

International Forestry Review ◽

10.1505/146554812800923345 ◽

2012 ◽

Vol 14 (2) ◽

pp. 145-156 ◽

Cited By ~ 7

Author(s):

L. Keča ◽

N. Keča ◽

D. Pantić

Keyword(s):

Cost Efficiency ◽

Net Present Value ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Present Value ◽

Internal Rate ◽

Poplar Plantations

Download Full-text

Economic analysis of a hypothetical bamboo-biochar plant in Zhejiang province, China

Waste Management & Research ◽

10.1177/0734242x17736945 ◽

2017 ◽

Vol 35 (12) ◽

pp. 1220-1225 ◽

Cited By ~ 7

Author(s):

Tao Zhang ◽

Fang Liang ◽

Wanhe Hu ◽

Xiaomeng Yang ◽

Hongzhong Xiang ◽

...

Keyword(s):

Small Businesses ◽

Large Scale ◽

Net Present Value ◽

Economic Benefits ◽

Zhejiang Province ◽

Internal Rate Of Return ◽

Present Value ◽

Good Market ◽

Forestry Industry

Significant quantities of bamboo waste are generated in Zhejiang province, China. Many small businesses in this area convert this waste to biochar for use as a cooking fuel (in residential barbecues). This case study was conducted to evaluate the potential economic benefits of building and operating an industrial-sized plant in this province, yielding 500 tonnes per year. The researchers developed a conceptual design for a hypothetical biochar plant and then calculated net present value (NPV), investment payback period (PBP), internal rate of return (IRR), and sensitivity analysis. Results show that the static investment PBP would be 2.58 years, the IRR would be 38.8%, and the NPV would be US$ 486,700. The IRR would be higher than the forestry industry benchmark (11%), indicating that a production line of bamboo-biochar with the stated yield not only could generate higher profits, but also could achieve a better return on investment. Thus, this study indicates that there are good market prospects for the bamboo-biochar industry in this region. The influence of sales prices on the IRR was more than that of operational costs, indicating that a large-scale plant should be designed to produce a high-quality bamboo-biochar. Supply chain issues such as transportation distances between locations where bamboo wastes are generated and the biochar plant should be considered in advance when siting new bamboo-biochar plants. The results from this research provide guidance to those considering development of bamboo-biochar plants in other parts of China.

Download Full-text

The Energy, Economic and Environmental Efficiency of a PV Installation Cooperating with a Heat Pumpin the Central Part of Europe. Case study

10.20944/preprints202011.0155.v1 ◽

2020 ◽

Author(s):

Sylwia Wciślik ◽

Dagmara Kotrys-Działak

Keyword(s):

Net Present Value ◽

Heating System ◽

Ecological Effect ◽

Solar Irradiation ◽

Rate Of Return ◽

Economic Potential ◽

Internal Rate Of Return ◽

Present Value ◽

Central Heating

The paper addresses an analysis of the efficiency and profitability of the operation of a photovoltaic installation located in the geometric centre of Europe (near Białystok, Poland), where the intensity of solar irradiation is not too high compared to other European countries. It is calculated that in that place average solar irradiation being lower even by approx. 26 kWh than that for the whole Europe, which results in a 26% drop in the economic potential of the utilisation of solar energy for its conversion. A case study and an economic analysis show that without minimum funding amounting to 50% of the investment costs paid for the modernisation of a central heating system assisted by PV cells, the time of return of pecuniary expenditures exceeds 7 years. Apart from the Simple Pay-Back Time SPBT, discount indicators determined in the paper also include the net present value NPV and the internal rate of return IRR. Moreover, a direct ecological effect has been determined for such an investment.

Download Full-text

Risk Manage Capital Investment Decisions: A Lease vs. Purchase Illustration

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v25i3.1031 ◽

2011 ◽

Vol 25 (3) ◽

Author(s):

Thomas L. Zeller ◽

Brian B. Stanko

Keyword(s):

Capital Investment ◽

Net Present Value ◽

Investment Decisions ◽

Capital Budgeting ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Wealth Creation ◽

Font Size ◽

Present Value ◽

Internal Rate

This paper demonstrates how to build risk into capital investment decisions.  We illustrate how to combine distribution theory, technology, and a business professional’s skills and insight into a capital investment analysis.  In addition, we show how management can approximate the risk of each cash flow estimate and display the overall capital investment results.  This framework is extended by showing how a mutually exclusive decision can be improved, using a lease versus purchase example.<a style="mso-footnote-id: ftn1;" name="_ftnref1" href="http://journals.cluteonline.com/index.php/JABR/author/saveSubmit/#_ftn1">[1]</a>  An Excel template is readily available from the authors allowing a hands-on application of the framework presented in this paper.  In addition, this paper positions the reader to comfortably use more advanced analytics, such as Monte Carlo simulation, a tool that is readily available in commercial software applications.<div style="mso-element: footnote-list;"> <hr size="1" /><div id="ftn1" style="mso-element: footnote;">This paper focuses on the application of net present value.  The advantage of using net present value in a capital budgeting decision is that it shows the potential stakeholder wealth creation and wealth destruction.  An internal rate of return analysis is intentionally left out of this paper.  According to Brealey, Myers and Allen, Principles of Corporate Finance, New York, NY: McGraw-Hill/Irwin 2006, pp. 91-99, internal rate of return should not be used to evaluate mutually exclusive capital investments.  </div></div>

Download Full-text

Sensitivity Analysis of Decorative Plant Business in Kendari City (Case Study on Dahlia Ornamental Plant Business)

International Journal of Agricultural Social Economics and Rural Development (Ijaserd) ◽

10.37149/ijaserd.v1i1.14159 ◽

2021 ◽

Vol 1 (1) ◽

pp. 13

Author(s):

Rabiatul Adawiah Gasnawati ◽

Abdi Abdi ◽

Awaluddin Hamzah

Keyword(s):

Sensitivity Analysis ◽

Net Present Value ◽

Payback Period ◽

Ornamental Plant ◽

Production Costs ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Present Value ◽

Benefit Ratio

The purpose of this study was to determine the sensitivity of ornamental plant business in Kendari City as a case study on dahlia ornamental plant business. This research was conducted in Kendari City which was determined purposively on the dahlia ornamental plant business. The research was conducted from July to November 2019. The analysis used in this study is an analysis of efficiency and income consisting of net present value (NPV) income benefit ratio (NBCR), internal rate of return (IRR), payback period (PBP). The results of the sensitivity analysis of ornamental plant businesses with increased production costs by 5% and selling prices decreased by 5%, the value of the NPV, NBCR, IRR and payback period shows a good value so that the ornamental plant business is feasible to be cultivated because it can return all investment costs used

Download Full-text

TINGKAT KELAYAKAN OPERASIONAL KAPAL PERIKANAN 30 GT PADA PERAIRAN SULAWESI (STUDI KASUS KM INKA MINA 957) The Operational Feasibility Level of 30 GT Fishing Vessel in Sulawesi Waters (case study of KM INKA MINA 957)

Marine Fisheries Journal of Marine Fisheries Technology and Management ◽

10.29244/jmf.9.1.1-9 ◽

2018 ◽

Vol 9 (1) ◽

pp. 1

Author(s):

Andi Haris Muhammad ◽

Daeng Paroka ◽

Sabaruddin Rahman ◽

` Syarifuddin

Keyword(s):

Interest Rate ◽

Net Present Value ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Present Value ◽

Fishing Vessel ◽

Internal Rate ◽

Market Interest Rate

The ability of a vessel to obtain catches is known as fishing vessel productivity. This greatly influences the feasibility level of the fishing operation. The objctive of the study is to evaluate the operational feasiblity level of 30 GT fishing vessel that operates in Sulawesi waters (case study INKA MINA 957). The use of Net Present Value (NPV) and Internal Rate of Return (IRR) methods showed that the catch should be of more than minimum 116 ton per year or the NPV value at Rp. 124.797.638,- with 10% interest rate assumption within 10 years. Furthermore, based on the internal rate of return (IRR) the interest obtained was approximately 12.2% which was higher than the market interest rate assumptions at about 2.2%. Keywords: fishing vessel, operational feasibility, NPV and IRRABSTRAKProduktivitas kapal perikanan adalah kemampuan kapal untuk memperoleh hasil tangkapan ikan. Produktivitas ini sangat mempengaruhi tingkat kelayakan operasional. Penelitian ini bertujuan untuk mengukur tingkat kelayakan operasional kapal perikanan 30 GT yang beroperasi di perairan Sulawesi (studi kasus KM INKA MINA 957). Metode Net Present Value (NPV) dan Internal Rate of Return (IRR) telah digunakan untuk mengukur tingkat kelayakan operasional. Hasil analisis menunjukkan bahwa kapal perikanan layak dioperasikan dengan prediksi hasil tangkapan minimal sebesar 116 ton pertahun atau nilai NPV sebesar Rp.124.797.638,- dengan asumsi suku bunga 10% selama 10 tahun. Selanjutnya berdasarkan Metode IRR diperoleh suku bunga 12,2%, hasil ini lebih besar 2,2% sebagaimana asumsi suku bunga dipasaran.Kata kunci: kapal perikanan, kelayakan operasional, NPV dan IRR

Download Full-text

MONTE CARLO SIMULATIONS FOR THE RISK MANAGEMENT OF ENVIRONMENTAL POLLUTION

Journal of Environmental Assessment Policy and Management ◽

10.1142/s146433321000353x ◽

2010 ◽

Vol 12 (01) ◽

pp. 87-101

Author(s):

OSAMA A. B. HASSAN

Keyword(s):

Risk Management ◽

Monte Carlo ◽

Monte Carlo Method ◽

Monte Carlo Simulations ◽

Environmental Pollution ◽

Human Health ◽

Stochastic Models ◽

Chemical Pollution ◽

The Monte Carlo Method

This article attempts to adapt the Monte Carlo method to the quantitative risk management of environmental pollution. In this context, the feasibility of stochastic models to quantitatively evaluate the risk of chemical pollution is first discussed and then linked to a case study in which Monte Carlo simulations are applied. The objective of the case study is to develop a Monte Carlo scheme for evaluating the pollution in a lake environment. It is shown that the results can be of interest as they define the risk margins that are important to the sustainability of the ecosystem in general, and human health in particular. Moreover, assessing the environmental pollution with the help of the Monte Carlo method can be feasible and serve the purpose of investigating and controlling the environmental pollution, in the long and short terms.

Download Full-text