A practical model for the supply chain growth optimization for automotive fuels in Mexico

Abstract

AbstractProfitability and energy efficiency depend on optimal operation of a supply chain network for automotive fuels in Mexico, even for clean energy expectations. This paper shows how decision‐making for fuels‐distribution network growth in Mexico points in the same direction, while the practical small optimization model, introduced in this paper, replaces a detailed model thereby offering great advantages to the analysts. The paper also describes the relevant strategies that were applied to ensure equivalences between the two models representing a supply chain. The model simplification not only reduces its size and computer time for execution but allows for the most relevant time reduction associated with preparing the data input to feed into the model, as well as in analyzing the results. Some distribution network growth options were evaluated by using both models with equivalent objective functions. Small model results give enough information for decision‐making support. The use of new facilities and economic benefits are similar to those obtained with the complex model. The main issues to take care of are bottleneck identification and commodities differentiation. If a binding constraint is removed in the small model, similar results are seen in the complex model when a specific bottleneck is improved. This is the first time that a practical model is used to evaluate multiple scenarios of the complex automotive fuel distribution network in Mexico.