Global Business and Management Research: An International Journal Vol. 7, No. 2 (2015) 53 Integrating Economic Analysis in Decision Making Process: A Case Study of a Steam Absorption Chiller in a Malaysian Gas District Cooling Plant * Isra Abbasi Universiti Teknologi PETRONAS Zulkipli B Ghazali Universiti Teknologi PETRONAS Mohd Amin Bin Abd Majid Universiti Teknologi PETRONAS Shahirul Fahizam Hussain Makhostia Sdn Bhd * Universiti Teknologi PETRONAS, Bandar Seri Iskandar, 31750 Tronoh, Perak, Malaysia Email: msc.isra@gmail.com ABSTRACT This paper highlights the integration of economic analysis in business decision making process. A Gas District Cooling Plant is proposing for the replacement of two existing units of Steam Absorption Chillers (SAC) with two new units. The new units of SAC will improve the plant efficiency and increase the plant capacity. As the proposal involves huge capital outlay, economic justification is central in the decision making. Employing incremental analysis between the new and existing SAC, economic models are used to evaluate the present worth, payback period, rate of return and sensitivity of the proposal to changes in initial investment, annual cost savings, net revenue gain and salvage value. Keywords: Gas District Cooling Plant, Investment Balance Diagram, Net Present Worth, Payback Period, Rate of Return, Sensitivity Analysis, Steam Absorption Chiller 1. INTRODUCTION Economic analysis supports rational business decision making by determining the best selection among alternatives course of action. Through the link of economic theory and decision sciences, optimal solution to business decision problems can be generated. A case in point is a proposal to replace two existing units (Unit A & B) of Steam Absorption Chiller (SAC) with two new units of SAC at a Gas District Cooling (GDC) Plant located in University Technology PETRONAS (UTP), Malaysia. The new SAC units will improve the plant efficiency and increase the plant capacity to meet additional demand. As the proposal involves huge capital expenditure, economic justification is accorded primary consideration in the decision making. 2. PROBLEM STATEMENT The existing plant capacity is able to meet the current demand of chilled water for UTP cooling system. However this installed capacity will not be able to cope up with the future