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

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.