Optimization
World-Class Decision Guidance. Optimal Results.
CombineNet Energy's approach to advanced sourcing and financially-driven operational decision guidance is based on advanced combinatorial optimization technologies developed by parent company, CombineNet Inc.
A significant challenge in making advanced decision guidance a reality is that the size, scope, and range of data to be considered makes analysis an extremely complex combinatorial optimization problem. Both advanced sourcing and enterprise decision guidance are clearing problems, deciding which supply and demand alternatives to accept and reject (and to what extent in the case of partially acceptable alternatives) so as to satisfy all, or most of, the operational constraints.
In the example of a vertically-integrated natural gas network, making decisions on gas procurement, storage and transmission while considering contract and resource utilization given a forecast of demand, is an incredibly complicated function. The optimal utilization of contracts and resources depends on the terms and conditions as specified in the contracts, the physical structure of the system, market dynamics, and weather factors.
Contracts define limits or bounds associated with the purchase, storage and distribution of gas along with the price for each activity. Resource limits, on the other hand, describe limits based on the physical aspects of the network such as deliverability into and out of storage, capabilities of compressor stations and throughput of pipes. Each of these has a direct bearing on the decision process as they place constraints on the decision maker's ability to improve the overall profitability of the organization.
The constraints imposed by contract terms and resources are not the only issues facing decision makers in an integrated natural gas company. The decision process is often compounded by factors such as the inherent uncertainty in both gas prices on the spot market and product demand. Demand, in particular, is subject to a number of items outside the decision makers control such as weather. Likewise, the mathematical properties associated with flow of gas into and out of storage and through a pipe network are very complex which adds a great deal of difficulty to the decision maker's problem.
Prior to CombineNet, no technology was capable of solving clearing problems of such scale and complexity in a timeframe that is suitable to a business user. CombineNet's optimization and algorithm technology development has yielded speed improvements of 4-5 orders of magnitude over other integer programming techniques. Additionally, CombineNet's proprietary tree search algorithms are often 10,000 times faster than the state-of-the-art general-purpose MIP solvers on the hard instances of real-world market clearing.
This optimization technology is incorporated into a back-end clearing engine, which provides the power behind both the Advanced Sourcing Application Platform (ASAP) and the Gas System Guidance System (GS2). The power of this technology enables a speed of decision making that is critical to success in business applications: it allows non-technical business professionals to analyze alternatives in minutes rather than months.