Allocation of Bulk Tanks to Improve Industrial Gas Distribution to Customers with Time-Varying Demand

Abstract

In this paper, we describe the results from an academic and industry collaboration to address the bulk tank allocation problem for industrial gas distribution systems where customer demand varies over time. The bulk tank allocation problem determines the preferred size of bulk tanks to assign to customer sites to minimize recurring gas distribution costs and initial tank installation costs. The problem is modeled as a mixed-integer programming model, and three solution approaches are presented. In the first two approaches, the problem is decomposed and a restricted master problem is solved. The third approach is a two phase periodically restricting heuristic approach. The results demonstrate the opportunities for substantial improvements in resource allocation and reductions in operational costs.

Keywords

• strategic tank allocation
• inventory routing
• large-scale optimization
• vehicle routing with split deliveries
• logistics planning