Model of clinker capacity expansion

Abstract

This paper describes a model which has been applied in practice to determine an optimal plan for clinker capacity expansion. The problem was formulated as an integer linear program aiming to determine the optimal number, size and location of kilns to be introduced each year during a given planning horizon. The optimal solution is defined as the one which maximises the net present value (NPV) of the cash flow generated by the introduction and operation of new kilns subject to capacity and demand constraints. Various demand scenarios and capital expenditure structures were tested by means of the model and a number of possible locations for new kilns were evaluated. Finally, the benefits derived by the company where the application took place are listed.