Modeling downstream petroleum supply chain: The importance of multi-mode transportation to strategic planning

• Multiple echelons, products and modes are modeled for the downstream petroleum supply chain.
• The importance of transportation mode selection to strategic planning is investigated.
• GIS is used in a large-scale case study to locate supply and demand nodes and to acquire transportation costs.
• Multimode model has lower total cost and a more suitable strategic design.
• The forecasted decrease in demand results in only minor changes to the supply chain configuration.

This paper proposes a deterministic mixed integer linear programming (MILP) model for downstream petroleum supply chain (PSC) network to determine the optimal distribution center (DC) locations, capacities, transportation modes, and transfer volumes. The model minimizes multi-echelon multi-product cost along the refineries, distribution centers, transportation modes and demand nodes. The relationship between strategic planning and multimodal transportation is further elucidated. A case study was considered with real data from the U.S. petroleum industry and transportation networks within Geographic Information System (GIS). A scenario analysis is also conducted to demonstrate the impact of key parameters on PSC decisions and total cost.