The performance of a compressor is known to be affected by the ingestion of liquid droplets. Heat, mass and momentum transfer as well as the droplet dynamics are some of the important mechanisms that govern the two-phase flow. This paper presents numerical investigations of three-dimensional two-phase flow in a two-stage centrifugal compressor, incorporating the effects of the above mentioned mechanisms. The results of the two-phase flow simulations are compared with the simulation involving only the gaseous phase. The implications for the compressor performance, viz. the pressure ratio, the power input and the efficiency are discussed. The role played by the droplet-wall interactions on the rate of vaporization, and on the compressor performance is also highlighted.

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