Long-term capacity planning of WDM transport networks under demand uncertainties and economy of scale

In this work, we summarize our ongoing research on the dimensioning of optical networks over a multi-period planning horizon with the uncertainties of the demand forecast. In particular, we consider the problem of upgrading capacity incrementally on a point-to-point wavelength-division multiplexing (WDM) system over a finite time horizon, so as to meet the evolving demands while minimizing the total effective system cost (installation cost and expected penalty cost for capacity shortage). To gain analytical insights, we setup this capacity planning problem in the framework of inventory control theory, and we provide solutions using dynamic programming technique. The optimization results can help us: 1) to gain quantitative insights on the impact of long-term demand variability and technological advance on the network design; 2) to analyze the trade-off between the policy of installing capacity earlier ("pay now") and the policy of delaying capacity installation later ("pay as you grow"); 3) to evaluate the merits of using low-density or high-density line systems.