Chapter 2 classifies the cost-effectiveness modelling techniques by the key issues, which should be considered for SDDP modelling, and discusses the potential strengths and weakness of each technique when they are used as the underlying evaluation model in SDDPs. Various ways to define SDDPs are also introduced with the comparison between SDDPs and representative combinatorial optimisation problems. A mathematical definition of SDDPs is presented using the framework of MDP, assuming the underlying evaluation model follows the structure of a discrete time Markov model. The potential computational complexity is discussed based on the mathematical definition of SDDPs.
