Time-Capacity Expansion of Waste Treatment Systems

A minimum cost method is developed for quantifying the opposing cost factors of economies-of-scale and the time cost of money as they jointly affect optimal capital investment decisions for the expansion of wastewater treatment systems. For a linear demand growth rate, optimal facility expansion, with regard to both timing and capacity requirements, is determined using a mathematical model. The economic implications of different expansion policies are graphed for various interest rates and scalar cost effects, using cost data mathematically formulated as a function of system capacity. The model is used to demonstrate that the optimal timing of facility expansion is a function of the time cost of money and the economy-of-scale characteristics of that facility, and is independent of the absolute capacity of the facility. Further, additional economies inherent in individually expanding separable components of a wastewater treatment system are quantified by the model.