In distribution system with product differentiation

This study is concern with the development of model to determine the optimal flow of distribution system of a Public Service Obligation state-owned company in order to maximize its profit. Basic form of the model is minimum cost flow (MCF) problem which is composed of production cost, transportation cost and revenue. The particular issue considered in the proposed model is the split of demand into public demand and commercial one. Public demands have to be fully satisfied, while the commercial ones are satisfied in case of excess plant capacity exists. MCF problem is approached by network representation (NR). Some dummy links and nodes are added to the physical distribution network to represent all model's components. In order to guarantee the equivalency of total supply and demand, we add Excess Supply/Demand Control Subnetwork into basic NR. Modified primal-dual algorithm is utilized to solve MCF problem of such NR.