Supply-Demand Decomposition of the National Coal Model

The National Coal Model is a highly disaggregate model of domestic coal supply and demand markets. The model has been extensively and successfully applied, but its linear programming component is computationally burdensome. In this paper we report computational results from experiments to reduce solution time through decomposition. The model is decomposed into two capacitated pure networks: a supply side, whose units of flow are Btus of coal; and a demand side, whose units of flow are megawatts of electrical generation capacity. The method used for integrating these components is a market equilibration (“cobweb”) algorithm. The mechanism is not generally convergent, but it produces an excellent starting basis for completion by standard linear programming methods. Order of magnitude solution time reductions have been achieved by the combined procedure. A new decomposition algorithm for linear programs is presented. The method is motivated by the present application, but has not been implemented.