Title: Optimization

LP: Linear programming

LP: Linear programming

How should the relevant LP for the electricity company be formulated?

(see the right side)

(see the next slide)

Primal problem:

how to allocate limited resources (=capacity) to generate electricity in order to satisfy demand at minimal cost

Objective: minimize cost

Constraint 1: Market for electricity clears (i.e., supply greater than or equal to demand)

Constraint 2: Market for capacity clears (i.e., existing capacity is greater than or equal to supply)

Constraint 3: Non-negativity (i.e., supply is always greater than or equal to zero)