Strategic and tactical models and algorithms for the coal industry under the 1990 Clean Air Act

Abstract

This thesis is concerned with a study of the effect of The Acid Rain Provision of the 1990 Clean Air Act on the investment, production, and distribution operations in the coal industry, with a concentration on the development of new mines, shutting down of inefficient strips of existing mines, and on blending and distribution problems. The problem here is to determine which new mines to open and when, and what decisions and schedules to make for the shipment of coal from mines to silos, cleaning and blending operations at silos, and the subsequent shipment of coal to customers over a multi-period time horizon, so as to satisfy the demand at a minimum total operational cost. To meet this objective, a long-term strategic model is developed, and is coordinated with a modification of a short-term tactical model developed by Sherali and Puri (1991). The final product is a computer-based decision tool which will serve as a mechanism for implementing cost effective decisions in light of complex variations in the production levels of existing and potential mines, ore quality, and demand and quality requirements. The strategic model will play a useful role in planning future growth and in making capital investment decisions, and the tactical model will help in making better operational decisions. The models can also be used to study the effect of various policies, by testing the sensitivity, feasibility, and the cost of system operations under different perturbations of system configuration, data, and demand specifications. Real operational data and future projections from the Westmoreland Coal Company are used for testing purposes.