A dynamic-material-value-based decomposition method for optimizing a mineral value chain with uncertainty

Jian Zhang and Roussos G. Dimitrakopoulos

European Journal of Operational Research, 2017, vol. 258, issue 2, 617-625

Abstract: A decomposition method is developed to optimize a mineral value chain composed of multiple mines and a material flow circuit. In the proposed decomposition method, the upstream mine production schedule and the downstream material flow plan are optimized simultaneously to maximize the expected NPV of the entire mineral value chain. The proposed approach is tested through a practical-scale case study and the test results show that the proposed method can effectively optimize the production schedule of each mine in consideration of downstream constraints and market uncertainty. Through the observation of the test results, we show that optimizing a mineral value chain in an integrative manner and considering market uncertainty can avoid overinvestment in strategic assets and overestimation of long-term profitability. The proposed decomposition method is not limited to the setting of a specific mineral value chain and can be easily extended to integrate more impacting factors.

Keywords: OR in natural resources; Mineral value chain; Large-scale optimization; Decomposition method; Market uncertainty (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:258:y:2017:i:2:p:617-625

DOI: 10.1016/j.ejor.2016.08.071

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