Optimization of distribution network of a petroleum industry

Abstract

Bharat Petroleum Corporation Limited (BPCL) faces difficulties in identifying whether they need to setup a new petroleum pipeline or share the existing under-utilized pipeline network of other companies such as IOCL and HPCL to meet the increasing demands of petroleum products from different parts of the country. It also faces problems in identifying the new demand centres in India for their petroleum products and decide on the mode of transportation for the same i.e. rail, road or pipeline which would not only assist them in transporting products on time and at the right location but also optimize the overall distribution costs. Since these decisions are critical for the company and requires huge amount of capital investment and time, detailed and systematic analysis as well as planning is required. In this project, we have created an analytical model which optimizes the overall distribution cost for BPCL based on various constraints to assess the most optimized and feasible mode of transportation (road, rail and pipeline). It also suggests whether any infrastructural investment is required in terms of new pipelines or the demand of a region can be satisfied by sharing pipelines from other companies. The programming model designed includes the factor of using the unutilized capacity of pipelines owned by other petroleum companies in the market to satisfy the overall demand of BPCL. The model can also be used for future purposes considering the demand from various destination nodes even after 20 years and it can suggest optimal location and capacity of refineries to be set up accordingly.