Optimizing short-term production plan using a portfolio optimization model

Abstract

Short-term production plans are the basis for operational mine production schedules. They concentrate on making long-term mine plans operationally feasible. It ensures a steady flow of product for meeting blending targets. Due to the quality variation of material, blend optimization is an uncertainty based optimization problem. There are different approaches toward uncertainty management and the current paper investigates a portfolio optimization model in order to minimize the risks in short-term plans. In this paper, a fuzzy linear programming model is formulated to provide a set of options for the mine plan. These blending options are treated as portfolios. Then a model for the optimal selection of a portfolio is introduced. The objective of the model is to maximize the expected return of the portfolio under constraints limiting its variance. The model is applied in a limestone mine complex.

Application of fuzzy linear programming for short-term planning and quality control in mine complexes

“…Therefore, the optimum blending plan is affected by the uncertainties of geological and chemical properties of the ore. Short-term planning in open pit mines has been studied by many researchers (Splaine et al, 1972;Wilke and Reimer, 1979;Zhang et al, 1992). Some researchers have incorporated the effect of uncertainties in short-term planning (Smith and Dimitrakopoulos, 1999;Kumral and Dowd, 2002;Fioroni, Bianchi, and Luiz, 2008;Gamache, Hébert, and Desaulniers, 2009;Jewbali and Dimitrakopoulos, 2009;Asad, 2010;Gholamnejad, 2008;Souza et al, 2010;Askari-Nasab et al, 2011;Eivazy and Askari-Nasab, 2012;Montiel and Dimitrakopoulos, 2015;Osanloo and Rahmanpour, 2017). They applied a variety of mixed integer linear programming models, Lagrangian parameterization, simulation, linear programming (LP), and heuristic models.…”