UPGA3033

PROCESS OPTIMIZATION
AND SIMULATION

TOPIC 1:
GENERAL FORMULATION OF
OPTIMIZATION PROBLEMS
 PART A
NATURE AND
ORGANIZATION OF
OPTIMIZATION PROBLEM
CONTENT
1. INTRODUCTION
2. EXAMPLES OF OPTIMIZATION PROBLEMS
2.1 Optimal Insulation Thickness
2.2 Optimal Operating Condition of Boiler
2.3 Optimum Distillation Reflux

2
CONTENT (CONT’D)
3. ESSENTIAL FEATURE OF OPTIMIZATION PROBLEM
3.1 Objective Functions
3.2 Constraints
3.3 General Form of Optimization Problems
3.4 Type of Solution
4. DEGREE OF FREEDOM
5. OBSTACLES TO OPTIMIZATION

3
NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
1. INTRODUCTION
• Optimization use of specific methods to determine the most
cost-effective and efficient solution to a problem or design
for a process.
• This technique is one of the major quantitative tools in
industrial decision making.
• A wide variety of problems in the design, construction,
operation, and analysis of chemical plants (as well as many
other industrial processes) can be resolved by optimization.
• Optimization pervades the fields of science, engineering,
and business.
• For typical engineering problem, a process can be
represented by some equations or perhaps solely by
experimental data.
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
• Usually, it is necessary to set a single performance
criterion in mind, such as minimum cost.
• The goal of optimization is to find the values of the
variables in the process that yield the best value of the
performance criterion.
• Typical problems in petrochemical engineering process
design or plant operation have many (possibly an infinite
number) solutions.
• Optimization is concerned with selecting the best among the
entire set by efficient quantitative methods.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
• Engineers work to improve the initial design of equipment
and strive to enhance the operation of that equipment once it
is installed so as to realize:
 the largest production,
 the greatest profit,
 the minimum cost,
 the least energy usage.
• In plant operations, benefits arise from improved plant
performance, such as:
improved yields of valuable products,
 reduced energy consumption,
 higher processing rates, and
 longer times between shutdowns. 6
NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
2. EXAMPLES OF OPTIMIZATION PROBLEMS
2.1 Optimal Insulation Thickness
• Insulation is the reduction of heat loss from a system to the
surroundings by applying insulation materials on the wall of
the system.
• The effect of insulation is better if more insulation materials
are applied.
• The addition of insulation should save money through
reduced heat losses.
• However, cost of insulation can be more expensive if more
insulation materials are used to provide a better insulation
effect.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
• Therefore, the amount of added insulation materials needed
can be determined by optimization.
Cost Total cost curve
(RM/year)
Cost of insulation

Cost of lost of energy

Insulation
x* = Optimum thickness thickness

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
2.2 Optimal Operating Condition of Boiler
• In a boiler it is desirable to optimize the air-fuel ratio so that
the thermal efficiency is maximized.
• However, environmental regulations encourage operation
under fuel-rich conditions and lower combustion
temperatures in order to reduce the emissions of nitrogen
oxides (NOx).
• The operation under fuel-rich condition will
 decrease boiler efficiency, and
 increase in undesirable hydrocarbon (HC) emissions.
• We are forced to consider maximizing efficiency versus
minimizing emissions, resulting in some compromise of the
two objectives.
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM

thermal efficiency
nitrogen oxide emission
hydrocarbon emission
Thermal efficiency

Emission

0 1.0 2.0
Air-fuel ratio

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
2.3 Optimum Distillation Reflux
• In a distillation column, less energy is consumed (lower
energy cost) if lower reflux ratio is adopted.
• However, the quality of the product will be degraded (the
selling cost of the product will decrease) if the reflux ratio is
being lowered down.
• From the viewpoint of optimization, there is an economic
minimum value below which the energy savings are less
than the cost of product quality degradation.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM

Constraints
Cost
(RM/year) Cost of heat
Region of feasible operation
Value of
product

Optimal
profit

Optimal
reflux ratio
Reflux ratio
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3. ESSENTIAL FEATURE OF OPTIMIZATION
PROBLEM
• A wide variety of optimization problems have amazingly
similar structures.
• Every optimization problem contains three essential
categories:
1. At least one objective function to be optimized.
2. Equality constraints (equations).
3. Inequality constraints (inequalities).
• Categories 2 and 3 constitute the model of the process or
equipment; category 1 is sometimes called the economic
model.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3.1 Objective Functions
• In optimization problems, objective function is the function
to be optimized (either to be maximized or minimized).
• Generally, objective function f is given by:
f(x1, x2, …, xn)
which is the function of n variables.
• For simplicity, the objective function is written as:
f(x)
where x is the vector of n variables (x1, x2, …, xn).

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3.2 Constraints
• In many problems, the choice of value x1, x2, etc is not
entirely free but is subject to some constraints, which are the
additional conditions arising from the nature of the problem
and the variables.
• There are two types of constraints:
1. Equality constraints
2. Inequality constraints
• Equality constraints are usually denoted as:
h1(x) = 0
h2(x) = 0
⋮
hm1(x) = 0
in which there are m1 equations as the function of x. 15
NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
• For simplicity, all equality constraints can be combined and
denoted by h(x), which is a vector of equations with
dimension m1.
• Inequality constraints are usually denoted as:
g1(x) ≥ 0
g2(x) ≥ 0
⋮
gm2(x) ≥ 0
in which there are m2 inequalities as the function of x.
• For simplicity, all inequality constraints can be combined and
denoted by g(x), which is a vector of inequalities with
dimension m2.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3.3 General Form of Optimization Problems
• In general, an optimization problem can be written as:
Minimize: f(x) [Objective function]
Subject to: h(x) = 0 [Equality constraints]
g(x) ≥ 0 [Inequality constraints]

where x is a vector is of n variables (x1, x2, …, xn),

h(x) is a vector of equations with dimension m1,
g(x) is a vector of inequalities with dimension m2.
• The total number of constraints is m = m1 + m2.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3.4 Type of Solution
• A feasible solution of the optimization problem is a set of
variables that satisfy all constraints (both equalities and
inequalities).
• An optimal solution is a set of values of the variables that
satisfy the all constraints and also provides an optimal value
for the objective function. In most cases the optimal solution
is a unique one.
• Hence, ALL optimal solution are feasible solution, but NOT
ALL feasible solution are optimal solution.
x
Feasible solution

Optimal solution

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example: Feasible Solution and Non-Feasible Solution
If the constraints of an optimization problem is given by:
x1 ≥ 1
x x1 = 1
x2 ≥ 1 2

x1 + x2 ≤ 4

Feasible solution x1 + x2 = 4
0
Non-feasible
solution
0 x2 = 1

x1
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example: Feasible Solution and Non-Feasible Solution
How if one more equality constraint is added?
x1 ≥ 1
x x1 = 1
x2 ≥ 1 2
x1 = x2
x1 + x2 ≤ 4
x1 = x2
Feasible solution
0
Non-feasible x1 + x2 = 4
solution
0 x2 = 1

x1
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.1
An engineer in a plant wish to schedule the production in two
plants, A and B, each of which can manufacture two products: 1
and 2. He wishes to maximize profits while meeting the market
requirements based on the following data:

Product (kg/day) Profit (RM/kg)

Plant
1 2 1 2
A MA1 MA2 SA1 SA2
B MB1 MB2 SB1 SB2

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.1 (cont’d)
Both plants run 365 days/year and maximum product 2 can that
be produced annually is given by 35,000 kg.
Formulate objective function and all (equality and
inequality) constraints involved in this optimization problem.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.2
A trucking company has borrowed $600,000 for new
equipment and is contemplating three kinds of trucks. Truck A
costs $10,000, truck B $20,000, and truck C $23,000.
How many trucks of each kind should be ordered to obtain the
greatest capacity in ton-miles per day based on the data on the
next slide?
Formulate a complete mathematical statement of the
problem, and label each individual part, identifying the
objective function and constraints with the correct units ($,
days, etc.). Make a list of the variables by names and symbol
plus units.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.2 (cont’d)
Data:
Truck A requires one driver per day and produces 2100 ton-
miles per day.
Truck B requires two drivers per day and produces 3600 ton-
miles per day.
Truck C requires two drivers per day and produces 3780 ton-
miles per day.
There is a limit of 30 trucks and 145 drivers.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.3
In a rough preliminary design for a waste treatment plant the
cost of the components are as follows (in order of operation):
1. Primary clarifier: $19.4 x1-1.47
2. Trickling filter: $16.8 x2-1.66
3. Activated sludge unit: $91.5 x3-0.30
where the x's are the fraction of the 5-day biochemical oxygen
demand (BOD) exiting each respective unit in the process, that
is, the exit concentrations of material to be removed.
The required removal in each unit should be adjusted so that
the final exit concentration x3, must be less than 0.05.
Formulate (only) the optimization problem listing the objective
function and constraints.
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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.3 (cont’d)

x0 x1 x2 x3

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
4. DEGREE OF FREEDOM
• Degree of freedom in an optimization problem is the number
of variables that can be specified independently and is
defined as follows:
NF = NV – NE
where NF = degree of freedom
NV = total number of variables involved in the
problem
NE = number of independent equations
• A degrees-of-freedom analysis separates modeling problems
into three categories:

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Category 1: NF = 0
The problem is exactly determined.
The number of independent equations is equal to the
number of process variables.
The set of equations may have a unique solution → the
problem is not an optimization problem.
For a set of linear independent equations, a unique solution
exists.
If the equations are nonlinear, there may be no real solution
or there may be multiple solutions.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Category 2: NF > 0
The problem is underdetermined.
More process variables exist in the problem than
independent equations.
At least one variable can be optimized → the problem is an
optimization problem.
Category 3: NF < 0
The problem is overdetermined.
Fewer process variables exist in the problem than
independent equations → the set of equations has no
solutions.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.4
Figure below shows the process flow chart for a series of two
distillation columns, with mass flows and splits defined by x1,
x2, …, x5. Determine the degree of freedom of the process.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
Example 1.5
Figure below shows the continuous stirred tank reactor
(CSTR). Determine the degree of freedom of the process.

wi = Inlet mass flow rate

Ti = Inlet temperature
w = Outlet mass flow rate
T = Outlet temperature
Q = Heating power

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
5. OBSTACLES TO OPTIMIZATION
1. The objective function or the constraint functions may have
finite discontinuities in the continuous parameter values.
• For example, the price of a compressor or heat
exchanger may not change continuously as a function
of variables such as size, pressure, temperature, and so
on.

Cost

Size of
compressor 32
NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
2. The objective function or the constraint functions may be
nonlinear functions of the variables.
• When considering real process equipment, the
existence of truly linear behavior and system behavior
is somewhat of a rarity.
• This does not preclude the use of linear
approximations, but the results of such approximations
must be interpreted with considerable care.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
3. The objective function or the constraint functions may be
defined in terms of complicated interaction of the
variables.
• A familiar case of interaction is the temperature and
pressure dependence in the design of pressure vessels.
• If the objective function is given as f = 15x1x22, the
interaction between x1 and x2 prevents the calculation
of unique values of x1 and x2 at the optimum.

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NATURE AND ORGANIZATION OF
OPTIMIZATION PROBLEM
4. The objective function or the constraint functions may be
exhibit nearly “flat” behaviour for some ranges of
variable or exponential behaviour for other ranges.
• This means that the value of the objective function (f)
or a constraint is not sensitive (x) or is very sensitive
(y), respectively, to changes in the value of the
variables.
f f
f is not
sensitive to x f is very
sensitive to y

x y

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NATURE AND ORGANIZATION
OF OPTIMIZATION PROBLEM
5. The objective function may exhibit many local optima,
whereas the global optimum is sought.
• A solution to the optimization problem may be
obtained that is less satisfactory than another solution
elsewhere in the region.
• The better solution may be reached only by initiating
the search for the optimum from a different starting
point.
f Local minima

Global minimum
x
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 PART B
FORMULATION OF THE
OBJECTIVE FUNCTION

CONTENT
1. ECONOMIC OBJCTIVE FUNCTIONS
2. MEASURE OF PROFITABILITY
2.1 Time Value of Money
2.2 Payback Period (PBP)
2.3 Return of Investment (ROI)
2.4 Net Present Value (NPV)
2.5 Internal Rate of Return (IRR)

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FORMULATION OF THE
OBJECTIVE FUNCTION
1. ECONOMIC OBJCTIVE FUNCTIONS
• The formulation of objective functions is one of the crucial
steps in the application of optimization to a practical
problem.
• It is a must to be able to translate a verbal statement or
concept of the desired objective into mathematical terms.
• In the chemical industries, the objective function often is
expressed in units of currency (e.g., U.S. dollars or Ringgit
Malaysia) because the goal of the enterprise is to minimize
costs or maximize profits subject to a variety of constraints.

38
FORMULATION OF THE
OBJECTIVE FUNCTION
• In other cases the problem to be solved is:
 maximization of the yield of a component in a reactor,
 minimization of the use of utilities in a heat exchanger
network,
 minimization of the volume of a packed column.
• When formulating the mathematical statement of the
objective, functions that are more complex or more nonlinear
are more difficult to solve in optimization.
• Fortunately, modern optimization software has improved
to the point that problems involving many highly nonlinear
functions can be solved.

39
FORMULATION OF THE
OBJECTIVE FUNCTION
• The ability to understand and apply the concepts of cost
analysis, profitability analysis, budgets, income-and-expense
statements, and balance sheets are key skills that may be
valuable for profit optimization.
• There are two major components of economic objective
functions in chemical industries:
1. capital costs
2. operating costs

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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.6
(Operating Cost)
Figure shows a
chemical plant with
three products (E, F,
G) and three raw
materials (A, B, C) in
limited supply, in
which each of the
three products is
produced in three
separate processes (1,
2, 3).

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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.6 (cont’d)
Process data:
Process 1: A + B → E
Process 2: A + B → F
Process 3: 3A + 2B + C → G

Raw material availability and cost

Raw Material Maximum Available Cost (RM/kg)
(kg/day)
A 40,000 1.5
B 30,000 2.0
C 25,000 2.5
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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.6 (cont’d)

Reactant Processing Selling

Requirement cost price
Process Product
(kg/kg (RM/kg (RM/kg
product) product) product)
1 E 2 1 1.5 4.0
A, B
3 3
2 F 2 1 0.5 3.3
A, B
3 3
3 G 1 1 1 1.0 3.8
A, B, C
2 6 3
Formulate the objective function to maximize the total
operating profit per day in the units of RM/day. Write down
all constraints involved.
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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.7 (Capital Cost)
Suppose you wanted to find the configuration that minimizes
the capital costs of a cylindrical pressure vessel. To select the
best dimensions (length L and diameter D) of the vessel,
formulate a suitable objective function for the capital costs.
The followings are assumed in the formulation of objective
function:
1. The ends of the vessel are 2:1 ellipsoidal heads, with an
area for the two ends of 2.32D2.
2. The thickness t is a function of the vessel diameter:
t = 0.108D + 0.125
3. The cost of fabrication (per unit volume of vessel wall) for
the ends is 1.5 times higher than the sides.
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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.7 (cont’d)
Formulate an objective function (in terms of L and D only)
to determine the diameter and length of the vessel which
minimizes the capital cost to fabricate it.

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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.8 (Operating Cost)
The rate of heat loss from a large insulated cylinder (see figure
below), for which the insulation thickness is much smaller
than the cylinder diameter and
the inside heat transfer
coefficient is very large, can
be approximated by the
formula:
A∆T
Q= (2.1)
x 1
+
k hc

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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.8 (cont’d)
where ∆T = average temperature difference between pipe
fluid and ambient surroundings, K
A = surface area of pipe, m2
x = thickness of insulation, m
h = outside convective heat transfer
coefficient, kJ/(h)(m2)(K)
k = thermal conductivity of insulation,
kJ/(h)(m)(K)
Q = heat loss, kJ/h
All of the parameters on the right hand side of Equation (2.1)
are fixed values except for x, the variable to be optimized.
Assume that:

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FORMULATION OF THE
OBJECTIVE FUNCTION
Example 1.8 (cont’d)
1. the cost of installed insulation per unit area can be
represented by the relation C0 + C1x, where C0 and C1 are
constants (C0 = fixed installation cost and C1 =
incremental cost per meter of thickness).
2. The insulation has a lifetime of n years and must be
replaced at that time.
3. Let the value of the heat lost from the pipe be H, (RM/kJ).
4. Let Y be the number of hours per year of operation.
Formulate an objective function to maximize the savings in
operating cost, savings expressed as the difference between the
value of the heat conserved less the annualized cost of the
insulation. Next, obtain an analytical solution for x*, the
optimum in terms of k, hc, H, Y, ΔT, n and C1.
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FORMULATION OF THE
OBJECTIVE FUNCTION
2. MEASURE OF PROFITABILITY
• Most often in the chemical process industries the objective
function for potential projects is some measure of
profitability.
• The projects with highest priorities are the ones with the
highest expected profitability.
• There are numerous measures of economic performance that
have been proposed:
1. Payback period (PBP) Ignoring time
2. Return of investment (ROI) value of money
3. Net present value (NPV) Considering time
4. Internal rate of return (IRR) value of money

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FORMULATION OF THE
OBJECTIVE FUNCTION
2.1 Time Value of Money
• The economic analysis of projects that incur income and
expense over time should include the concept of the time
value of money.
• This concept means that a unit of money on hand now
(current RM 1) is worth more than the same unit of money in
the future (future RM 1).
• This is because RM1000 invested today can earn additional
money; in other words, the value of RM1000 received in the
future will be less than the present value of RM1000.
• The relationship between present value and future value of
money at period n is given by the following equation:
Fn (2.2)
P=
1+i n
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FORMULATION OF THE
OBJECTIVE FUNCTION
where P = present value of money
Fn = future value of money at period n
n = period (for example, year)
i = rate of return of investment
• In Equation (2.2), constant rate of return of investment i is
assumed.

2.2. Payback Period (PBP)

• PBP measures how long a project must operate to break even
by ignoring the time value of money.
Cost of investment
PBP =
Cash flow per period

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FORMULATION OF THE
OBJECTIVE FUNCTION
• Example: For an investment of RM20,000 with a return of
RM500 per week the PBP is
RM 20,000
= 40 weeks
RM 500/week

2.3 Return of Investment (ROI)

• ROI is a simple yield calculation without taking into account
the time value of money.
Next income after tax per year
ROI (in %) = ×100
Cost of investment

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FORMULATION OF THE
OBJECTIVE FUNCTION
• Example: Given the net return of RM 6,000 (per year) for an
initial investment of RM 45,000, the ROI is
RM 6,000/year
×100 = 13.3%/year
RM 45,000
2.4 Net Present Value (NPV)
• NPV is calculated by adding the initial investment
(represented as a negative cash flow) to the present value of
the anticipated future cash flow (positive or negative).
• Positive NPV → the investment increases the company's
assets: The investment is financially attractive.
• Zero NPV → the investment does not change the value of
the company's assets: The investment is neutral.
• Negative NPV → the investment decreases the company's
assets: The investment is not financially attractive.
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FORMULATION OF THE
OBJECTIVE FUNCTION
2.5 Internal Rate of Return (IRR)
• IRR is the rate of return (interest rate, discount rate) at which
the future cash flows (positive plus negative) would equal
the initial cash outlay (a negative cash flow).
• The value of the IRR relative to the company standards for
internal rate of return (i) indicates the desirability of an
investment.
 IRR > i → the investment is financially attractive.
 IRR = i → the investment is marginal.
 IRR < i → the investment is financially financially
unattractive.

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FORMULATION OF THE
OBJECTIVE FUNCTION
• In optimization you are interested in:
1. minimizing the payback period (PBP), or
2. maximizing the return of investment (ROI), or
3. maximizing the net present value (NPV), or
4. maximizing the internal rate of return (IRR)

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