An Optimization Based Integrated Short-Term Refined Petroleum Product Planning System

Darwin Klingman, Nancy Phillips, David Steiger, Ross Wirth, Rema Padman and R. Krishnan
Additional contact information
Darwin Klingman: Graduate School of Business, University of Texas, Austin, Texas 78712
Nancy Phillips: Graduate School of Business, University of Texas, Austin, Texas 78712
David Steiger: DSI Consulting, 8312 S. Quebec, Tulsa, Oklahoma 74137
Ross Wirth: Citgo Petroleum Corporation, One Warren Place, Box 3758, Tulsa, Oklahoma 74103
R. Krishnan: Graduate School of Business, University of Texas, Austin, Texas 78712

Management Science, 1987, vol. 33, issue 7, 813-830

Abstract: This paper contains a new and very successful application of mathematical programming in the petroleum industry. Specifically, the paper describes the design and implementation of a model and computer system to address the complex short-term planning and operational issues associated with the supply, distribution, and marketing of refined petroleum products. This system has been successfully implemented at Citgo Petroleum Corporation. The benefits include a $116 million reduction (based on historical inventory-to-sales ratios) in product inventories resulting in a $14 million per year reduction in working capital costs and an additional $2.5 million per year estimated contribution to bottom line profits due to multiple supply, distribution, and marketing insights provided by the system.

Keywords: networks/graphs: applications; industries: petroleum/natural gas; planning: corporate (search for similar items in EconPapers)
Date: 1987
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:33:y:1987:i:7:p:813-830

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