Original Problem Description
We consider an oil industry network consisting of 8 Refineries, 15 Storage Points (SP’s), 38 Depots and 56 Retail Outlets (RO’s). The SP’s and Depots belong to 6 companies and the distribution is shown below:
|
Company
|
Storage Point
|
Depot
|
|
A
|
2
|
5
|
|
B
|
3
|
8
|
|
C
|
3
|
7
|
|
D
|
2
|
6
|
|
E
|
1
|
5
|
|
F
|
5
|
7
|
Distribution of SP and Depots
The flow of order (O) and supply (S) is
shown in the diagram below:
Managerial Decisions
Managers at SP’s and Depots are to take the following decisions:
- How many gallons of oil to order to which supplier by which mode of transportation?
- How many gallons of oil to supply to which customer by which mode?
Following modes of transportation are available:
- Pipelines are available from some selected Refineries to SP’s.
- Road (by tankers) and Rail (by rakes) network are the other modes.
Consideration for each mode are given below:
| Mode |
Pipe |
Road |
Rail |
Transportation Cost
($/gallon/mile) |
1.35 |
0.75 |
0.95 |
Capacity
(gallons) |
NA |
20 per tanker |
40 per rake |
Speed
(Miles per day) |
450 |
220 |
245 |
Distances between all places under consideration are provided.
Following data is available to the managers when they take decisions:
- Customer demands (including backlogs)
- Preferred customer modes for order replenishment
- Inventory status of the SP/Depot.
Other Considerations:
- Finite number of tankers is available at SP’s and Depots. On any given day, a maximum of 50 tankers is available.
- Mode of transportation constraints:
- If supplier wants to replenish the order through a mode costlier than the one indicated by the customer, then supplier pays half the cost difference plus 1$/gallon.
- If supplier replenishes the order through cheaper mode, or through customer indicated mode, then supplier incurs only 1$/gallon cost for miscellaneous settings.
- Supplies have to be made available to the customer as soon as possible.
- It has been seen that:
- On any given day, a supplier gets order from 65% of total potential customers.
- Amount of order ranges from 50-250 gallons.
Given the inventory level, demands and preferred mode of transportation for a particular day, the order/supply strategy has to be optimized.
|
