Incremental pricing

To estimate the overall transition cost, the STM tracks the incremental costs of the hydrogen and fuel-cell vehicles sold in the market relative to the same number of gasoline vehicles. Two components of this transition cost are estimated over time. First is the incremental price of buying hydrogen fuel-cell vehicles each year,... 

Another important facet of RTO models is the inclusion of the effects of the lower-level process control. The controls are included because they influence the total effect of changes in optimization variables on the profit. A simple example demonstrating the importance of control is shown in Fig. 5. The fuel gas system pressure is controlled by adjusting one of the two sources of purchased fuel. Because the two sources have different prices, the selection of the manipulated fuel determines the incremental price of the fuel. The control design determines that the incremental prices is 2/GJ. Note that this incremental price is different from the average price. Also, the price for reducing fuel consumption is lower than if the higher price fuel had been adjusted. 

Requiring incremental pricing for all new pipeline transport capacity. 

In 2000, again after some wrong turns, the FERC mandated that pipeline companies price new or expanded services on an incremental basis. Setting incremental pricing as the default rule for new pipeline construction put an end to the fight over traditional certification. If a pipeline company approached the Commission with a new proposal, it was no longer required to demonstrate connected gas supplies. With a portfolio of letters of intent from committed incremental shippers, the Commission had virtual prima facie evidence of economic need. The typical time period needed to plan and construct a typical large-scale pipeline expansion project dropped from five years to two. "... 

In this case study, you will solve a supplier selection and order allocation problem with two products, two buyers, two suppliers and each supplier offering "incremental" price discounts (not "all unit discount"). The objective is to minimize total cost, which consists of fixed cost and the variable cost. Fixed cost is a one-time cost that is incurred if a supplier is used for any product, irrespective of the number of units bought from that supplier. 

Cost of acquiring one unit of product i from supplier k at price level m Quantity at which incremental price breaks occurs for product i by supplier k... 

Linearizing constraints In the presence of incremental price discounts, objective function is nonlinear. The following set of constraints are used to linearize it ... 

Set of incremental price breaks for different price levels Description... 

The range information is of two basic types. Shadow prices are available for items not in the solution basis, such as an equipment capacity that was completely used up with none remaining. The shadow price is the incremental value of additional capacity and ranges are provided to show the capacity range to which this value applies. 

In the relatively few years since the preparation of the previous volume in this series, the explosion of synthetic and clinical experimentation on the semi and totally synthetic antibacterial p-lactam antibiotics has continued, providing a rich body of literature from which to assemble this chapter. The search for utopiasporin, the perfect cephalosporin, continues. The improvements in. spectrum and clinical properties achieved to date, however, are largely incremental and have been achieved at the price of substantially higher costs to the patient. Nonetheless, these newer compounds are truly remarkable when compared with the properties of the fermentation-derived substances from which they have sprung. 

The efficient heat pump reduces energy use by 1,676 kWh per year on average. Is the efficient model heat pump a good investment Suppose the incremental cost of the efficient unit, as compared with the less efficient unit, is 1,000, and electricity cost 10 cents per kWh. With this price of electricity, the efficient heat pump reduces electricity costs by 167.60 per year. Taking a simplified approach for purposes of illustration and assuming that each unit lasts indefinitely and has no repair, maintenance, or replacement costs, and ignoring possible tax effects, the internal rate of return may be calculated as 1,000= 167.60/r, which is 16.76 percent per year. If the household can borrow money at, say, 10 percent per year and earn 16.76 percent, the investment makes economic sense. If we assume a 10 percent discount rate, the present value of the investment is 1,676, which exceeds the initial investment cost. The net present value is 676, which indicates that the investment is feasible. 

Major disincentives to enhanced oil recovery are the lack of tax incentives and a substantial decline in the price of oil since the end of 1981. All the investment in new wells and surface facilities and injectants must take place before any incremental oil is produced. 

At a sales price of 13.00 per barrel, the value of the incremental oil produced by the TFSA was between 94,900.00 and 117,000.00. This revenue was generated at a chemical cost of between 1.93 and 3.87 per incremental barrel. Cumulative incremental oil production, shown in Figure 5, indicates that the volume of incremental oil produced reached a constant and maximum value 18 months after the pilot was started. Of the total incremental oil recovered, 37.5 % was produced in the first six months of the pilot and 81.25 % was produced by the end of the... 

The choice of cyclone modification, from an operating point of view, becomes a balance of incremental profit from increased conversion, versus catalyst makeup charges, and from a capital cost point of view, the price of either of the cyclone modifications, which must be depreciated. In many instances, there is an additional background time element, involving ongoing development of more attrition resistant and/or active catalyst. 

In Problem 7.1 what are the shadow prices for incremental production of gasoline, kerosene, and fuel oil Suppose the profit coefficient for crude 1 is increased by 10 percent and crude 2 by 5 percent. Which change has a larger influence on the objective function ... 

A third lattice-matching scenario is to use a corresponding III-V compound for a substrate. For instance, the lattice constants for CdTe and InSb are both listed as 0.648 nm [390], and similar lattice matches are found between the other II-VI and III-V compounds. As with the II-VI compounds, there are a number of situations where the lattice constants of the substrate can be incrementally adjusted by alloying with a third element. In addition, some high-quality wafers of III-V compounds are available commercially at reasonable prices. 

A consequence of such a cost structure is that, in the short run, it will be profitable for the firm to sell output at prices that cover the lower incremental costs and yield some margin above those costs, but fall far short of total... 

Price discrimination refers to the practice of selling identical products to different sets of customers at different prices. Expressed another way, different customers pay different markups over the identical incremental cost of producing an identical product. Price discrimination is widely practiced in the hotel and airline industries, by universities in the United States that can vary their tuition through scholarships, by electric power companies, and in the health care industry. Hospitals in the United States, for example, routinely charge different payers different prices for the same services. In the U.S. pharmaceutical market, different prices are charged to different insurance carriers and to self-paying patients. Worldwide, the same pharmaceutical firms sell the identical product to different countries at different prices. 

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