Fuzzy financial analyses of demand-side management alternatives

Fuzzy financial models are derived for the profitability analyses of demand-side management (DSM) alternatives. The present value of cost and equivalent uniform annual cost models are selected to determine the least-cost solution, while the net present value, payback year and benefit/cost ratio models are proposed for the execution of cost-benefit analyses. The means and variances of the fuzzy financial indexes associated with DSM alternatives are evaluated by Mellin transform in order to determine their relative ranking in a decision-making process. The performance of the proposed models is verified through the simulation of a numerical example and by considering their application to two practical DSM programmes: the choice of a suitable air-conditioning system for an office building and the evaluation of different cogeneration alternatives for a synthetic rubber corporation in Taiwan. These investigations confirm not only that the results of the proposed fuzzy financial models are consistent with those of the conventional crisp models, but they also demonstrate that the proposed methods represent readily implemented possibility analysis tools for use in the arena of uncertain financial decision-making.