A linear programming approach to the electricity contract capacity problem

Determination of electricity contract capacity is a problem faced by all industrial customers in Taiwan. In the literature, the problem has been solved using metaheuristics, such as genetic algorithm and particle swarm optimization, which require substantial computation time to solve. In this paper we formulate the problem as a linear program, which requires only polynomial time. Our proposed linear program is better than any metaheuristic approach because a globally optimal solution can be guaranteed while using much less computation time. Two real-world cases, one from a university and the other from a paper mill, are used to demonstrate that the model can minimize the electricity bill for industrial customers.