Derek Wang

Seasonal Energy Storage Operations with Limited Flexibility: The Price-Adjusted Rolling Intrinsic Policy

The value of seasonal energy storage depends on how the firm operates storage to capture seasonal price spreads. Energy storage operations typically face limited operational flexibility characterized by the speed of storing and releasing energy, which makes the optimal policy, in general, difficult to compute. A widely used practice-based heuristic, the rolling intrinsic (RI) policy, generally performs well compared with an optimal policy but can significantly underperform in some cases. In this paper, we aim to understand the gap between the RI policy and the optimal policy and leverage the resulting insights to improve the RI policy. A new heuristic policy, the price-adjusted rolling intrinsic (PARI) policy, is developed based on theoretical analysis of storage options. This heuristic adjusts certain prices before applying the RI policy to provide the RI policy with estimates of the values of various storage options. We evaluate the performance of the RI and PARI polices using actual data from the natural gas industry. Our results show that, on average, the PARI policy recovers about 67% of the value loss of the RI policy. Furthermore, when the value loss of the RI policy is larger, the PARI policy tends to recover a higher fraction of that value loss.

Efficiency assessment and resource allocation for hospitals by data envelopment analysis

Assessing the efficiency of hospitals is a critical research problem in the health care sector. In this paper, we employ the data envelopment analysis (DEA) method to integrate multiple inputs (beds, physicians, nurses, staffs) and multiple outputs (patients, discharges, surgeries, revenue) to develop efficiency measures of the hospitals. In addition, we derive the case-mix index to incorporate information on patient conditions into the model. Then under the DEA framework, we further investigate how to re-allocate the input resources to the hospitals to improve the overall performance of health care service without compromising each hospitals efficiency. We apply the proposed method to a set of hospitals in a representative city of China to demonstrate the effectiveness of the models. Specifically, through better allocation, a small change of input resources can lead to larger improvement in output and efficiency.