Marginal profit maximization estimation of supply chains by waste energy decrement: a case study of the power industry

Abstract

Economic growth and excessive fossil energy consumption have direct effects on environmental destruction and greenhouse gas increments. The existing appropriate pattern for economic performance increase as well as pollution emissions abatement is a basic issue in industry activities. In this paper, a data envelopment analysis (DEA) model is introduced for estimating the directional marginal profit maximization of supply chain divisions based on wasted energy and power losses. The purpose of this study is to estimate the directional marginal productivity in the supply chain, which enables us to find the optimal direction of efficient divisions on the frontier. This makes the allocation of resources create a marginal profit increase and the pollution emissions be abated simultaneously. Indeed, the proposed model considers the synergistic effects of each input on MP estimation in predetermined directions. The model is able to estimate the marginal profit maximization of desirable output and undesirable output decrease for each input simultaneously. The results suggested that the gas field division of one of the supply chains had fundamental capacities for energy production increments and flare gas decrements. Furthermore, the gas field division of this supply chain also had a considerable structure for the marginal profit maximization of outputs based on flare gas decreases. Additionally, the distribution lines of 0.80% supply chains provided wasted energy reduction by adding one extra unit to the line's capacity in the determined direction. Especially, there were supply chains that had investment opportunities for an acceptable abatement of power losses. This not only enables divisions to respond to fluctuations in demand as they produce more energy in critical situations like climate change but also decreases harmful emissions as wasted energy in supply chain divisions.