A coal shipping and blending problem for an electric utility company

In this paper, we address the issues of coal supply and blending pertaining to an electric utility company in Taiwan. Since the fuel used by coal-fired power plants are mainly imported in bulk from overseas sources, the planning of coal shipping and blending is of great economic importance. This operation involves the consideration of (1) each contract's coal supply, quality and price, (2) each power plant's demand, environmental constraints and limit on the maximum number of different coal sources that can supply it, (3) installation of blending facilities and (4) the transient seaport's shipload capacity. A mixed-integer zero-one programming model is presented for finding optimal shipping and blending decisions of coal fuel from each overseas contract to each power plant. A solution procedure is developed that employs heuristic rules in conjunction with branch-and-bound methods, and is illustrated using real-world data collected from the electric power company. Results reveal the benefits of the proposed approach, which has proven to be very practical and convincing for the top management of the company.