Bulk tank allocation to improve distribution planning for the industrial gas industry

Kimberly P. Ellis, Hanif D. Sherali, Lance Saunders, Shengzhi Shao and Charlie Crawford

IISE Transactions, 2014, vol. 46, issue 6, 557-566

Abstract: An important strategic-level decision in the industrial gas industry involves the allocation of bulk gas tanks to customer sites. For a set of customers having specified demands, the bulk tank allocation problem determines the preferred size of bulk tanks to assign to customer sites in order to minimize tank investment costs and gas distribution costs for the industrial gas distributor. For a single gas product and multiple depots, the problem is modeled as a mixed-integer program and then solved using a decomposition approach. A heuristic for clustering customers and developing routes is proposed based on a sweep algorithm. These potential routes serve as input for the bulk tank allocation problem, which selects routes and assigns tanks to customer sites. The approach provides a valuable method for analyzing strategic-level decisions while incorporating operational-level characteristics. The approach is evaluated using data from an international industrial gas distributer to demonstrate the potential for improving the efficiency of gas distribution.

Date: 2014
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DOI: 10.1080/0740817X.2013.849831

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