Nonconvex Optimization Approach to Bilevel Problem of Coal Production and Purchase With Storage
DOI:
https://doi.org/10.2298/YJOR250415044GKeywords:
bilevel optimization modeling, KKT-approach, reverse-convex programming, convex maximization, Global Search Theory, local search, global search schemeAbstract
The paper addresses a new mathematical model of interaction between coal manufacturers and coal importers in a country coal market as a bilevel optimization problem. The goal of the upper level which is decided on coal purchases and storage, is to satisfy the demand for coal in each time period, minimizing the costs of purchase and storage. At the lower level, each supplier company maximizes its profit by varying the volume of coal production based on the purchase prices. The presence of binary variables adds complexity to the model. We transform the bilevel problem into a single-level nonconvex problem and apply the Global Search Theory to develop solution approaches for the resulting problem. The advantages and disadvantages of the proposed approaches are discussed.
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