Economic Reliability Forecasting in an Uncertain World

Substantial work has applied stochastic techniques to network reliability models. These techniques can estimate risk, variance and uncertainty values. Unfortunately, these models do not address the issues of revenues, return on investment, or the time-value of money. To address these issues, we have developed an Economic Reliability Analysis [ERA] framework at the University of Virginia that fuses reliability engineering methods with economic analysis. We combine the ERA framework with stochastic techniques to evaluate a simple network and a proposed network upgrade. We simulate key availability and financial elements of both networks and apply the ERA framework to these elements. These results are compared with full path enumeration results of the same networks. This analysis provides a richer, more complete method to apply stochastic network techniques to operational network upgrades. Index Terms Stochastic network models, Reliability and maintenance models, Stochastic simulation.