In this paper, we considered a deterministic inventory model with time-dependent demand and time-varying holding cost where deterioration is time proportional. The model considered here allows for shortages, and the demand is partially backlogged. The model is solved analytically by minimizing the total inventory cost. The result is illustrated with numerical example for the model. The model can be applied to optimize the total inventory cost for the business enterprises where both the holding cost and deterioration rate are time dependent.
In this work, we study the inventory replenishment policy over a fixed planning period for a deteriorating item having a deterministic demand pattern with a linear trend and shortages. The model is solved analytically by minimizing the total inventory cost. The model can be applied to optimize the total inventory cost for the business enterprises where both the holding cost and deterioration rate are constant.
Two common challenges in the appraisal of deeper prospects in deepwater are, the selection of the overall strategy - campaign or sequential, and justification of any individual activity in this high cost environment. Both require objective assessment of the Value of Information.
When dealing with multiple adjoining prospects, which not only have subsurface dependencies in their uncertainty characterization, but also dependent development concepts, the value of appraisal appears to be intuitively high.However, quantifying such VOI is extremely challenging since the different combinations of subsurface realizations and development scenarios propagate into millions of economic realizations.Furthermore, the time and effort needed to update the analysis for new information is nearly as great as for the first complete iteration.
Traditionally such a problem would be solved using three branches for volume uncertainty (Low, Mid, High) for each of the prospects; details are lost in the analysis that may result in the VOI being non-representative. This paper presents a methodology that samples the probability density function more exhaustively but does so very efficiently w.r.t calculation overhead.A two-pronged approach is adopted:Defining a nearly exhaustive range of the discrete combinations of subsurface volumes from different prospects, then "binning" these possibilities in volume to create a representation of the frequency distribution.Recursively pre-calculating the economic simulations for numerous combinations of bins of volumes for different development concepts / strategy
The methodology enables studying the problem in much greater detail and also decreases the turnaround time to update the expected economic value and VOI as new data is gathered and other insights are gained. The probability density function can be quickly updated when only the probabilities change while the realizations and scenarios remain unaffected.
This paper demonstrates the application of the above approach in evaluating appraisal VOI for a set of adjoining prospects in deepwater Gulf of Mexico that are both geologically dependent and share potential development synergies.
Introduction
E&P companies are venturing into more and more difficult territories to find and develop hydrocarbons. Exploration and Appraisal of deep basins in deep water have always posed both technical and also economic and commercial challenges. Drilling wells in this environment costs upwards of 40 MMUSD. With such costs, it is that much more important to perform an objective analysis of Value of Information (VOI) whenever an appraisal well (or an appraisal plan) is brought to the table for funding.
VOI analyses have always been attempted with a level of rigor judged to demonstrate reasonable justification of a proposed expenditure. When the appraisal costs are this high, this level of rigor is also very high. Objective analysis of the problem becomes further complicated when a set of prospects that are not only geologically dependent but may also share a common, and interdependent development system. In this paper, efforts to analyse such a set of prospects in deepwater Gulf of Mexico is presented.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.