This paper contains the basic definition and application of the physical optimum as a method for process evaluation and optimization. By means of the exemplary balance of a wood pellet-fired boiler, the conventional efficiency is compared to the PhO. Furthermore, this study demonstrates the possibility of applying the thermodynamic state variable exergy as a physical reference property of a system within the PhO method. To explain the approach, the heat generation in the wood pellet-fired boiler is compared to the supply from a heat pump, which itself is connected to a power plant. Furthermore, the process-independent PhO is explained in order to illustrate the limitations of feasible optimization. Additionally, possible research topics such as the integration of dynamic behavior in the method are approached. As a conclusion, the differences between the methods outline the advantage of the PhO in the optimization process.