Reference no: EM133014728

Nonlinear optimization assignment:

In the FPL electricity pricing model, we assumed that the capacity level is a decision variable. Assume now that capacity has already been set at 0.65 million of mWh. (Note that the cost of capacity is now a sunk cost, so it is irrelevant to the decision problem.) Change the model appropriately and run Solver. Then use SolverT-able to see how sensitive the optimal solution is to the capacity level, letting it vary over some relevant range. Does it appear that the optimal prices will be set so that demand is always equal to capacity for at least one of the two periods of the day?