Title: An optimisation model for downstream petroleum supply chain incorporating geographic information system (GIS)

Authors: Yasaman Kazemi; Joseph Szmerekovsky

Addresses: Transportation and Logistics Program, NDSU Dept. 2880, North Dakota State University P.O. Box 6050, Fargo, ND 58108, USA ' College of Business, NDSU Department 2420, North Dakota State University, P.O. Box 6050, Fargo, ND 58108, USA

Abstract: The petroleum industry has one of the most complex and advanced supply chains around the world, which has motivated numerous studies aiming at optimising the distribution network and managing the logistics operations. This paper proposes a deterministic mixed integer linear programming (MILP) model to determine the optimal location of the distribution centres (DCs), capacities and allocation of the products in the downstream petroleum supply chain (PSC) by considering demand, capacity and flow balance constraints. The MILP minimises the multi-echelon multi-product cost for the petroleum industry along the refineries, DCs and demand nodes. The MILP is further tested with real data for the PSC network involving supply at the existing refineries and proposed DCs. Geographic information system (GIS) was used to analyse spatial data and to map the supply chain refineries, DCs and demand nodes to visualise the process. Sensitivity analysis is conducted on key parameters to provide insights on PSC decisions, while minimising the total cost.

Keywords: downstream supply chains; petroleum supply chains; optimisation models; mixed integer linear programming; MILP; distribution networks; logistics decisions; GIS; geographic information systems; supply chain management; SCM; modelling; facility location; distribution centres; demand constraints; capacity constraints; flow balance constraints; supply chain refineries; visualisation; product allocation.

DOI: 10.1504/IJISM.2016.077049

International Journal of Integrated Supply Management, 2016 Vol.10 No.2, pp.151 - 172

Received: 24 Jan 2015
Accepted: 26 Sep 2015
Published online: 20 Jun 2016 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article