Incorporating spot market price fluctuations for oil products into logistics modelling
by
Elena A. Medova
Centre for Financial Research, Judge Institute of Management Studies, University of Cambridge

Logistics management of an international oil consortium involves strategic investment valued in billions. With the continuing fall of oil prices and the irreversibility of tactical decisions for production, transportation and inventory policies, strategic level logistics decisions must be hedged against uncertainty in spot oil market activity.

In this paper an implementation of the stochastic programming model DROPS (Depot and Refinery Optimization Problem - Stochastic) for strategic level logistics management is presented. A stochastic data simulator has been developed as a part of our overall modelling system. From the viewpoint of implementation, this work constitutes a case study of a very large scale stochastic programming model for scheduling decisions in space and time. For such problems alternative solution methods are reviewed from the point of memory requirement and the development of parallel schemes and prelimenary computational results are given.

Date received: March 24, 1999

Copyright © 1999 by the author(s). The author(s) of this document and the organizers of the conference have granted their consent to include this abstract in Atlas Conferences Inc. Document # cacq-28.