NGL02-1: Multi-Stage Investment Decision under Contingent Demand for Networking Planning

Telecommunication companies, such as Internet and cellular service providers, are seeing rapid and uncertain growth of amount of traffic routed through their networks. It has become a challenge for these companies to make optimal decisions for equipment purchase that simultaneously satisfy the uncertain future demand while minimizing investment cost. This paper presents a decision-making framework for installing the required equipment into the networks while in the uncertain environment. The framework is based on new multi-stage stochastic programming mathematical models that capture the complexity of the individual Central Office (CO) decision-making process. The models are solved using the online NEOS server. Two examples are presented to illustrate the procedure. The optimization model also addresses the equipment pricing problem, i.e., what premium is worth paying for shorter installation times.