Mathematical Modeling for Demurrage Reduction in Coal Transportation for an Indian Thermal Power Plant

Bhatnagar Amit, Gupta Ritesh, Pappu Sriharsha and Goutam Dutta

No WP2004-09-06, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: Competitive pressures on power plants have seen them attempting to reduce their operating expenses for profitable operations. In India, the plants use wagons of the Indian Railways to transport coal from the mines (in case of domestic coal) or from the ports (in case of imported coal). Once these loaded railway wagons have reached the power plant, they need to be unloaded and released within a stipulated time frame. If there is any delay beyond the stipulated time, the power plant has to pay penalty cost to the Indian Railways. In this paper, we describe an analysis of the underlying causes behind these delays. We use correlation analysis, queuing theory and simulation to mathematically model the coal arrival process in the company. The recommendation suggested by the study is currently under implementation.

Date: 2004-09-06
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