The mathematical models as a decision support tool for the oil transportation business: A case study of an oil business in Thailand

Abstract

The oil industry in Thailand primarily relies on truck transportation due to the versatility of trucks. Different truck sizes can easily access many customer locations better than any other transportation mode. However, although trucks have many advantages, the transportation cost per unit is very expensive compared to railway, air, waterway, and pipe transportation modes. Previous data indicated that shipping costs were approximately 703.995 USD/month/fleet and the transportation utilization was 83.145%. Therefore, efficiencies should be identified to improve business operations. This paper proposes an oil transportation plan with transshipment points by adopting Network Flow Models (NFM) to develop a Generalized Network Flow Model (GNFM). The developed GNFM was applied to solve three different problems and compared to the existing method. The objectives of the proposed model were to minimize total cost and maximize truck efficiency. Multi-Criteria Decision Analysis (MCDA) was considered to set the optimal decision criteria for managing the oil transportation network with the transshipment sites. The proposed model with the Cluster Model (CT) provided optimal results, with a total cost of 663.539 USD/month/fleet and a truck efficiency of 88.029%.

Keywords

• network flow model
• transshipments
• oil delivery
• multi-criteria decision analysis
• truck efficiency