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Selection of the economic objective function for the optimization of process flow sheets
Novak-Pintarič, Zorka ; Kravanja, Zdravko
This paper highlights the problem of selecting the most suitable economic optimization criteria for mathematical programming approaches to the synthesis, design, and optimization of chemical process ...flow sheets or their subsystems. Minimization of costs and maximization of profit are the most frequently used economic criteria in technical papers. However, there are manyother financial measures which can lead to different optimal solutions if applied in the objective function. This paper describes the characteristics ofthe optimal solutions obtained with various optimization criteria like the total annual cost, the profit, the payback time, the equivalent annual cost, the net present worth, and the internal rate of return. It was concluded that the maximization of the net present worth (NPW) with a discount rate equal to the minimum acceptable rate of return (MARR) is probably the most appropriate method for the optimization of process flow sheets or their subsystems. Similar or equal solutions can be obtained by simpler criteria of minimum equivalent annual cost or maximum profit if the annual investment cost is calculated by using the MARR instead of the straight-line depreciation method.These criteria represent a thorough compromise between quantitative andqualitative measures, because they consider the absolute terms of future cash flows of investments equally important as profitability through the life cycle of the project. The uncertainty related to the value of the MARR was considered by the generation of Pareto optimal solutions for the NPW and by the stochastic analyses of two design example problems.
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