A multi-period fuzzy mathematical programming model for crude oil supply chain network design considering budget and equipment limitations

The major oil industry upstream activities include the exploration, drilling, extraction, pipelines installation, and production of crude oil. In this paper, we develop a mathematical model to plan for these operations as a crude oil supply chain network design problem. The proposed multi-period mixed integer linear programming model entails both strategic (e.g., facility location and allocation) and tactical (e.g., project and production planning) decisions. With the objective of maximizing total Net Present Value (NPV) at the end of planning horizon, the decisions to be made comprise the location of the facilities, the flow of commodities and the amount of investment. The uncertain natures of important input parameters such as capital and operational cost, demand and price of crude oil, are taken into account via fuzzy theory. Finally, the performance of the developed model is investigated using the real data of Iranian South Oilfields. Keyword: Crude oil supply chain, oilfield development, multi-period programming, time horizon analysis, fuzzy optimization. 1Introduction Supply chain management (SCM) is the management of the flow of goods and services. It includes the movement and storage of raw materials, inventory, and finished goods from point of origin to point of consumption. Applying the concept of supply chain management can provide considerable competitive advantage for any companies from any sectors (Damghani, 2015). In this context, the petroleum/oil industry can be characterized as a supply chain which is of vital importance in the economy of the world oil-rich countries. The optimization of such a supply chain can significantly increase the profitability of oil companies and improve the national economic indices. A typical oil industry supply chain is composed of an exploration operation at well heads, crude procurement and storage logistics, transportation to refineries, refinery operations, and distribution of products. These activities can be classified into two categories. *Corresponding author. ISSN: 1735-8272, Copyright c 2016 JISE. All rights reserved Journal of Industrial and Systems Engineering Vol. 9, special issue on supply chain, pp 88 – 107 Winter (January) 2016