Centralized production planning using reference operating points: application to fossil fuel power plants

Abstract This article proposes a centralized Data Envelopment Analysis (DEA) approach for determining efficient operation points for the different plants of an organization given the desired aggregate production targets. The proposed approach minimizes the total input consumption and undesirable output generation. The concept of a reference operating point for each plant is introduced and used to scalarize the multiobjective problem as well as to anchor the targets computed for each plant. Additional DEA models to check the feasibility of the aggregate production targets and to gauge remaining slack capacity for each plant are also formulated. The proposed approach has been applied to the electricity mix and pollutant emissions of fossil fuel power plants owned by a large US utility. A scenario of 5% reduction in the aggregate electricity production has been considered together with +/−20% bounds on the total electricity produced by each plant. The results indicate that, giving the same importance to all pollutants, reductions of 6% and 9% for CO2 and Hg, respectively, and above 35% for SO2 and NOx can be achieved. These emissions reductions obtained by centralized production planning are larger than those that can be achieved by the individual plants independently determining their own production plans.