SOLVING THE PRODUCTION-TRANSPORTATION PROBLEM IN THE PETROLEUM INDUSTRY

Abstract

In this paper we formulate two new models of the production-transportation problem which can be described as follows.
Let us suppose that there are several plants at different locations producing certain number of products and large number of
customers of their products. Each plant can operate in several modes characterized by different quantities of products and
variable production costs. The customers' demand for each product during the considered time period is known. We
consider the problem of finding the production program for each plant as well as the transportation of products to
customers for which the sum of the production and transportation costs is minimized given the condition that each
customer can satisfy its demand for a given type of product from one plant only. We also formulate the problem as a
bilevel mixed-integer programming problem. We solve the models for the available data from a petroleum industry and
compare the results.