A Model for the Optimization of the Petroleum Supply Chain in China and its Empirical Analysis

Abstract

as a major oil consuming and importing country, optimization of China’s petroleum supply chain is important for lowering oil consumption costs and assuring energy safety. In this paper, we develop an optimization model based on linear programming to minimize the overall costs of the petroleum supply chain, and solve the model with parameters assigned according to the actual operation of China’s petroleum supply chain in 2007. The results of the model basically match the facts, so we can analyze China’s petroleum supply chain based on the model. The empirical results show that the demands of the refining sector, domestic and imported crude oil prices and exchange rate are the main factors impacting on the costs of the supply chain.