Long Range Planning in Open-Pit Mining

Horst Albach
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Horst Albach: Bonn University, Germany

Management Science, 1967, vol. 13, issue 10, B549-B568

Abstract: In open-pit mining of lignite, production plans have to be set up for a period of about twenty to thirty years. This is partly due to the close interaction of production plans and investment plans and partly due to legal requirements for open-pit mining in Germany. The major uncertainties encountered in setting up a production plan stem from the geological structure of the pit. The total deposit of lignite in the field as well as the stratification of the layers of waste material and lignite can he considered as stochastic variables. The production plan is formulated as a chance-constrained programming problem. The model requires maximization of a linear form subject to linear and non-linear constraints. In order to facilitate computation of the large-scale problems encountered in practical applications the original model is changed into a straightforward linear programming model. An iteration procedure is derived by which the solution to the original non-linear problem is found. The production plan is computed for different levels of acceptable risk. The results form a risk-profit-surface from which management has to pick the optimum-optimorum plan according to its risk-preference function.

Date: 1967
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