Integrated scheduling and inventory management of an oil products distribution system

The oil supply chain is facing new challenges due to emerging issues such as new alternative energy sources, oil sources scarcity, and price variability with high impact on demand and production and profit margins reduction. Additionally, the existence of large, complex and world wide spread businesses implies a complex system to be managed where distribution can be seen as one of the key areas that needs to be efficiently and effectively managed. Different types of distribution modes characterize the oil supply chain where the pipeline mode is one of the most complex to operate when having multiproduct characteristics. This paper addresses the planning of a generic oil derivatives transportation system characterized by a multiproduct pipeline that connects a single refinery to a storage tank farm. Two alternative mixed integer linear programming models (MILP) that aim to attain a set of planning objectives such as fulfilling costumers’ demands (which is mandatory) while minimizing the medium flow rate are developed. Additionally, final inventory levels are avoided to be excessively low. A real world scenario of a Portuguese company is used to validate and compare the two alternative MILP models developed in this paper.     

Multiobjective optimisation of production,distribution and capacity planning of global supply chains in the process industry

The performance of a supply chain should usually be measured by multiple criteria. We address production, distribution and capacity planning of global supply chains considering cost, responsiveness and customer service level simultaneously. A multiobjective mixed-integer linear programming (MILP) approach is developed with total cost, total flow time and total lost sales as key objectives. Also, two strategies to expand the formulation plants’ capacities are considered in the model. The ε-constraint method and lexicographic minimax method are used as solution approaches to tackle the multiobjective problem. Finally, a numerical example is investigated to demonstrate the applicability of the proposed model and solution approaches.     

A NOTE ON USER SOLUTION STRATEGY FOR MIXED-INTEGER LINEAR PROGRAMMING MODELS

Large-scale mixed-integer linear programming (MILP) models may easily prove extraordinarily difficult to solve, even with efficient commercially implemented MILP solution codes. Drawing on experience gained in solving and analyzing three intertemporal investment planning MILP models for electric power supply, this note offers several practical suggestions for reducing computer solution times for general production-allocation MILP models. Solution time reduction stems from judicious use of the powerful computational capabilities of existing commercial linear programming codes in conjunction with information known or to be learned by the practitioner about the model's structure.     

DYNAMIC LOT SIZING FOR A SINGLE-FACILITY MULTIPRODUCT PROBLEM IN A ROLLING-HORIZON ENVIRONMENT

This paper considers a production planning model for a single-facility multiproduct problem where backlogging is not allowed. A planning-horizon theorem is derived. From that theorem, a forward algorithm for finding an optimal solution over a finite horizon and a procedure for selecting the first-period production in a rolling-horizon environment are developed. Computational results from a set of simulation experiments designed to investigate the cost effectiveness of the procedure demonstrate its effectiveness.     

A tradeoff model for green supply chain planning:A leanness-versus-greenness analysis

This article presents a tactical supply chain planning model that can be used to investigate tradeoffs between cost and environmental degradation including carbon emissions, energy consumption and waste generation. The proposed model also incorporates other aspects of real world supply chains such as multiple transport lot sizing and flexible holding capacity of warehouses. A solution methodology, the Nested Integrated Cross-Entropy (NICE) method, is developed to solve the proposed mixed-integer nonlinear mathematical model. The application of the model and solution method is investigated in an actual case problem. Analysis of the numerical results focuses on investigating the relationship between lean practices and green outcomes. We find that (1) not all lean interventions at the tactical supply chain planning level result in green benefits, and (2) a flexible supply chain is the greenest and most efficient alternative when compared to strictly lean and centralized situations.     

The benefits of a cross-docking delivery strategy: a supply chain collaboration approach

In this study, two models are developed to co-ordinate both production and distribution in order to reduce the relevant costs in a supply chain. According to the functions of the distribution centre, there is a distinction between an inventory co-ordination point and an inventory storage point. The former is a cross-docking strategy, and the latter is a traditional warehousing strategy. The manufacturer has distinct production processes when co-operating with the distribution centre. Case study analysis is used to illustrate the models developed, in which the following conclusions can be obtained: the cross-docking distribution strategy will result in tremendous savings in the total system cost for the supply chain. This study makes two important contributions to the production, and logistics literature. First, the range of applications was extended by studying a new combinatorial problem that incorporates cross-docking in a supply chain environment. Second, computational performance with cross docking was evaluated. The benefit delivery policy for a distribution centre was found by means of integrating manufacturer production planning and a distribution centre delivery policy.     

Long range planning and advertising

In practice, advertising is almost invariably regarded, as a tactical decision. It is shown that such an approach tends to systematically misallocate advertising and other resources among products. This paper shows why, in the modern multiproduct firm, advertising must be developed from a clear statement of strategy. It also reviews for managers some of the unresolved dilemmas in advertising planning.     

Optimal design of supply chain networks under uncertain transient demand variations

We consider a detailed mathematical formulation for the problem of designing supply chain networks comprising multiproduct production facilities with shared production resources, warehouses, distribution centers and customer zones and operating under time varying demand uncertainty. Uncertainty is captured in terms of a number of likely scenarios possible to materialize during the lifetime of the network. The problem is formulated as a mixed-integer linear programming problem and solved to global optimality using standard branch-and-bound techniques. A case study concerned with the establishment of Europe-wide supply chain is used to illustrate the applicability and efficiency of the proposed approach. The results obtained provide a good indication of the value of having a model that takes into account the complex interactions that exist in such networks and the effect of inventory levels to the design and operation.     

A Decision Support System for Production/ Distribution Planning in Continuous Manufacturing

This paper presents a decision support system (DSS) for managing production/distribution planning in a continuous manufacturing environment. The vendor has multiple plants and distribution centers (DCs). The trading partners have widely varying independent demand patterns. The DSS is designed for use in a multiproduct environment with overlapping raw materials and processing requirements. The production and distribution lead times at plants may span multiple planning periods. The impact of any manual override of a suggested solution can also be evaluated. The DSS is based on a linear programming model with a rolling horizon and was originally designed for a large process industry. Results of a pilot implementation using actual data are also presented, which show potential for significant savings for the company.     

The impact of operations anticipations on the quality of stochastic location-allocation models

It is now a common practice to use optimization models, such as location-allocation models, to support the design of supply chain networks (SCN). The value creation potential of a SCN design must be evaluated in terms of capital expenditures, but also of the operating revenues and expenses incurred during the planning horizon considered. The design model used should therefore be formulated to anticipate these revenues and expenses (relatively) accurately over the planning horizon. In classical location-allocation models, the aggregate flow and throughput variables used yield very crude anticipations. It was never shown that they lead to the best SCN design that one should expect. This paper draws on the stochastic multi-period location-transportation problem (SMLTP) for studying the impact of various types of operations anticipations on the quality of the SCN designs obtained. Since accurate anticipations yield more complex models, solvability is also an issue. Several alternative SCN design models based on more detailed anticipations than the ones embedded in classical location-allocation models are proposed and tested. Accuracy-solvability trade-offs are explored and recommendations are made on the modeling strategy to use to get better SCN designs.     

PRODUCTION-DISTRIBUTION PLANNING IN A LARGE SCALE COMMODITY PROCESSING NETWORK

This paper describes a methodology for production-distribution planning in a large scale commodity processing network. Based on earlier research efforts dealing with single-commodity and multi-commodity distribution system modeling and on production planning for a single-plant commodity processing facility, a mathematical programming methodology is developed for a multiplant soybean processing network. Application of the model leads to the specification of a production plan for a multi-period time horizon, while at the same time indicating the quantities of soybean meal and soybean oil to be supplied to various customers in various locales. Both sets of decisions are made under the general criterion of maximizing the net income produced by the soybean processing complex, subject to various production, inventory, capacity, supply and demand constraints. Test results from application of the model are presented and discussed.     

Multiperiod Capacity Expansion in Globally Dispersed Regions

Multiperiod capacitated location (MCL) models specify where and when capacity expansions should be made, and how large they should be. The MCL model developed in this paper incorporates a shift from manufacturing for overseas markets to manufacturing in overseas markets. While MCL models generally have not provided lower bounds on the optimal solution, the methodology of this paper provides both upper and lower bounds. Computational results are given for problems involving up to 200 locations/destinations and 10‐year planning horizons. Near‐optimal solutions are provided in reasonable computing times with average convergence less than 2%. Representative variations in cost between regions are simulated in the test problems, and the managerial implications of alternative diversification strategies are also assessed.     

REQUIREMENTS PLANNING FOR CONTROL OF INFORMATION RESOURCES

Producing reports assembled from files, records, and raw data is a major function of the computer in modern organizations. Transaction processing, records management, file organization, and data-base management are aspects of the information production function that have received a good deal of attention. But planning, scheduling, and controlling the production of information products have been neglected. For complex applications involving assembly of reports from multilevel information sources, the requirements planning model is suggested as an effective alternative to present methods. Thus, our suggestion is that the computer be used to plan, schedule, and control computer production of information products. Presently available material requirements planning software may be employed with minor modifications that depend on the given information system characteristics. In this paper an example of requirements planning as applied to production of information in a satellite control system is presented.     

Linear solution schemes for Mean-SemiVariance Project portfolio selection problems: An application in the oil and gas industry

We study the Mean-SemiVariance Project (MSVP) portfolio selection problem, where the objective is to obtain the optimal risk-reward portfolio of non-divisible projects when the risk is measured by the semivariance of the portfolio׳s Net-Present Value (NPV) and the reward is measured by the portfolio׳s expected NPV. Similar to the well-known Mean-Variance portfolio selection problem, when integer variables are present (e.g., due to transaction costs, cardinality constraints, or asset illiquidity), the MSVP problem can be solved using Mixed-Integer Quadratic Programming (MIQP) techniques. However, conventional MIQP solvers may be unable to solve large-scale MSVP problem instances in a reasonable amount of time. In this paper, we propose two linear solution schemes to solve the MSVP problem; that is, the proposed schemes avoid the use of MIQP solvers and only require the use of Mixed-Integer Linear Programming (MILP) techniques. In particular, we show that the solution of a class of real-world MSVP problems, in which project returns are positively correlated, can be accurately approximated by solving a single MILP problem. In general, we show that the MSVP problem can be effectively solved by a sequence of MILP problems, which allow us to solve large-scale MSVP problem instances faster than using MIQP solvers. We illustrate our solution schemes by solving a real MSVP problem arising in a Latin American oil and gas company. Also, we solve instances of the MSVP problem that are constructed using data from the PSPLIB library of project scheduling problems.     

分布决策环境下生产-分销协同计划研究

针对分布决策环境下因信息不对称使得供应链协同计划求解困难及难以达到全局最优的问题,本文利用多层规划理论和方法构建一个供应链生产-分销协同计划模型,采用模糊交互式协商和遗传算法的优化求解方法对协同计划模型进行求解。该方法求解的结果是一组满足约束条件的满意解,各节点企业根据自身偏好和约束信息决定是否接受该满意解,或者修正各自目标满意度隶属函数重新求解。决策过程具有一定的柔性。最后通过算例给出供应链生产-分销协同计划满意解的求解过程,对文中所建立的模型和算法进行了有效地说明和验证。求解结果说明该模型和协商方法能够有效地解决非对称信息条件下供应链生产-分销协同计划的求解和冲突问题。     

Using simulation to manage project supply chain in the offshore oil and gas industry

This paper is aimed at comparing simulation against spreadsheets as decision support tools to properly manage project supply chain in the offshore oil and gas industry. The paper presents a case study related to the problem of sizing a chain for pipeline laying from an offshore field in the Barents sea to the Russian coast. Results obtained through a spreadsheet developed by an oil and gas company have been compared to the ones gathered from an ad hoc simulation model. A simulation model with no stochastic variable has been introduced: results are quite similar to the ones of the spreadsheet, which allowed to validate the simulation model. However, the spreadsheet cannot take into account the continuous move of the pipe-lay vessel while laying the pipes and it does not consider stochastic variables whose effect in real life is not negligible. Both weaknesses above are discussed.     

Simple systems for computer-aided production management

Future production concepts where workshop employees responsibly carry through planning and scheduling tasks call for new principles ofcomputer-aided production management (CAPM). With the aid of a critical analysis ofdifferent planning and scheduling mechanisms it will first be laid down why the field of computer-aided production management is suited for a dialogue-oriented planning support based on simple models rather than for the objective of automation with the aid of refined optimization algorithms. Consequently, an alternative design is proposed. This is a prototypically realized concept aiming at computer-aided support of production management of production teams.     

A visual planning solution to streamline the processes of hybrid cross-dockings

Cross-docking is a logistic strategy widely adopted both in manufacturing and distribution contexts. Despite the huge number of researches on this topic, most of them remain rather theoretical as they do not pay enough attention to operational aspects and daily functioning patterns of cross-dockings. This article aims at introducing a new focus for cross-docking research by proposing a visual planning solution to manage daily operation of a manufacturing cross-docking. By avoiding complex optimization algorithms and by adopting concepts belonging to the lean management theory, the article shows the potential of visual planning techniques to improve performance of cross-dockings. Starting from a specific industrial context, the shipping warehouse of an Italian company of the oil andand gas sector, a visual management methodology has been proposed to support the operation of cross-dockings. Although developed in a particular context, the proposed methodology and its underlying principles are to be considered general and potentially applicable to a wide range of cross-dockings. The methodology fully exploits an analytical tool, namely, the Safety Margin coefficientthat could be used for capacity planning purposes and to evaluate quantitatively the system performance at a given time instant.     

Trends in managed care organizations: implications for the physician executive.

The rapid change in the managed health care industry is placing substantial demands on the managerial and leadership skills of physician executives. These changes are forcing a reevaluation of the fundamental principles of managed care organizations, specifically in terms of patient satisfaction, cost containment, and quality health care. Additionally, the physician executive will be confronted with substantial issues concerning future staffing needs. This article assesses the health care industry's environment to suggest where managed care is going and how physician executives should position themselves to optimize their position in the marketplace.     

Planning a crude oil supply system through simulation

This paper will describe the planning of a marine terminal that will supply the water borne crude requirements of an oil refinery. The refinery has experienced a major shift in supply from domestic pipeline crudes to foreign water borne crudes delivered by increasingly large tankers. Sufficient tankage does not exist at the refinery to allow proper segregation, handling and fluctuations in inventory levels caused by the size and uncertainty of tanker arrivals. The major steps involved in this analysis included developing and evaluating alternative proposals for new tankage at the terminal and the refinery. For this purpose, a model was built to simulate the proposed marine terminal and crude deliveries to the refinery. This combined discrete/continuous simulation model was then used to determine the optimal proposal for tankage.