A Mathematical Programming Management Model for A Storage Replenishment Ocean Transportation Problem

Abstract

This paper presents a mathematical programming model for a scheduling transportation problem. We examine a specific demand scenario that faces many oil companies, based on which a company aims to satisfy a given client's demand requirement of crude oil at a minimum cost. The overall cost of transportation is comprised of daily operational expenses of vessels, cost of time and spot chartering, and penalties incurred on violating specified delivery time windows. Due to the high cost associated with time and spot chartering, it is lucrative to utilize self-owned vessels, to the extent possible, and resort in chartered vessels as needed. A solution of the developed model specifies dispatching and delivery days of shipments and determines the fleet mix of vessels, and hence the model can be utilized for scheduling, planning, managing, and negotiating purposes.