Fuzzy versus probabilistic benefit/cost ratio analysis for public work projects

Cengiz Kahraman

International Journal of Applied Mathematics and Computer Science (2001)

  • Volume: 11, Issue: 3, page 705-718
  • ISSN: 1641-876X

Abstract

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The benefit/cost (B/C) ratio method is utilized in many government and public work projects to determine if the expected benefits provide an acceptable return on the estimated investment and costs. Many authors have studied probabilis- tic cash flows in recent years. They introduced some analytical methods which determine the probability distribution function of the net present value and in- ternal rate of return of a series of random discrete cash flows. They considered serially correlated cash flows and the uncertainty of future capital investment and reinvestment rates and they presented some formulae for the B/C ratio for probabilistic cash flows. In the paper, the expected value and the variance of a probabilistic cash flow are obtained by means of moments. Then a probabilistic B/C ratio is given. Fuzzy set theory has the capability of representing vague knowledge and allows mathematical operators and programming to be applied to the fuzzy domain. The theory is primarily concerned with quantifying the vagueness in human thoughts and perceptions. The fuzzy B/C ratios are devel- oped for a single investment project and for multiple projects having equal or different lives.

How to cite

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Kahraman, Cengiz. "Fuzzy versus probabilistic benefit/cost ratio analysis for public work projects." International Journal of Applied Mathematics and Computer Science 11.3 (2001): 705-718. <http://eudml.org/doc/207528>.

@article{Kahraman2001,
abstract = {The benefit/cost (B/C) ratio method is utilized in many government and public work projects to determine if the expected benefits provide an acceptable return on the estimated investment and costs. Many authors have studied probabilis- tic cash flows in recent years. They introduced some analytical methods which determine the probability distribution function of the net present value and in- ternal rate of return of a series of random discrete cash flows. They considered serially correlated cash flows and the uncertainty of future capital investment and reinvestment rates and they presented some formulae for the B/C ratio for probabilistic cash flows. In the paper, the expected value and the variance of a probabilistic cash flow are obtained by means of moments. Then a probabilistic B/C ratio is given. Fuzzy set theory has the capability of representing vague knowledge and allows mathematical operators and programming to be applied to the fuzzy domain. The theory is primarily concerned with quantifying the vagueness in human thoughts and perceptions. The fuzzy B/C ratios are devel- oped for a single investment project and for multiple projects having equal or different lives.},
author = {Kahraman, Cengiz},
journal = {International Journal of Applied Mathematics and Computer Science},
keywords = {risk; economic justification; fuzzy set theory; B/C ratio; benefit/cost ratio},
language = {eng},
number = {3},
pages = {705-718},
title = {Fuzzy versus probabilistic benefit/cost ratio analysis for public work projects},
url = {http://eudml.org/doc/207528},
volume = {11},
year = {2001},
}

TY - JOUR
AU - Kahraman, Cengiz
TI - Fuzzy versus probabilistic benefit/cost ratio analysis for public work projects
JO - International Journal of Applied Mathematics and Computer Science
PY - 2001
VL - 11
IS - 3
SP - 705
EP - 718
AB - The benefit/cost (B/C) ratio method is utilized in many government and public work projects to determine if the expected benefits provide an acceptable return on the estimated investment and costs. Many authors have studied probabilis- tic cash flows in recent years. They introduced some analytical methods which determine the probability distribution function of the net present value and in- ternal rate of return of a series of random discrete cash flows. They considered serially correlated cash flows and the uncertainty of future capital investment and reinvestment rates and they presented some formulae for the B/C ratio for probabilistic cash flows. In the paper, the expected value and the variance of a probabilistic cash flow are obtained by means of moments. Then a probabilistic B/C ratio is given. Fuzzy set theory has the capability of representing vague knowledge and allows mathematical operators and programming to be applied to the fuzzy domain. The theory is primarily concerned with quantifying the vagueness in human thoughts and perceptions. The fuzzy B/C ratios are devel- oped for a single investment project and for multiple projects having equal or different lives.
LA - eng
KW - risk; economic justification; fuzzy set theory; B/C ratio; benefit/cost ratio
UR - http://eudml.org/doc/207528
ER -

References

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