A mathematical model on liquefied natural gas supply chain with uncertain demand
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A mathematical model on liquefied natural gas supply chain with uncertain demand Durdu Hakan Utku1 · Betül Soyöz1 Received: 22 October 2019 / Accepted: 5 August 2020 © Springer Nature Switzerland AG 2020
Abstract This study focuses on the optimization of transportation and the storage of a Liquefied Natural Gas (LNG) supply chain. Liquefaction of the natural gas enables the suppliers to carry the gas by different modes of transportation to the customers by changing its state from gaseous state to liquid while decreasing its volume by 600 times. We consider the liquefaction, transportation, and re-gasification costs for the LNG supply chain and, propose a new model for the LNG supply chain, which minimizes the costs that may incur in the LNG supply chain. In the proposed model, sea, road, and pipeline transportation modes are taken into consideration. Unlike other models, in addition to the on-shore/stationary storage facilities at the storage sites, off-shore/ rented vessels (or floating holding tanks), are used to mitigate the demand uncertainty regarding the unexpected increase and decrease in customer demand. The LNG Supply Chain Model is first tested by 57 alternative test problems with randomly generated hypothetic data for each case and solved. Then the developed model is extended with normally distributed demand data which is generated through a Cycle Service Level (CSL) of 0.90 and solved by using GAMS CPLEX 24.1.3. Keywords Liquefied natural gas · Supply chain management · Optimization · Linear programming Mathematics Subject Classification 90B06 JEL Classification C61
1 Introduction A supply chain includes all the components involved to satisfy a customer request. The supply chain includes manufacturers, suppliers, transporters, warehouses, retailers, and customers. Proper company decisions in the supply chain as a component can increase the supply surplus and profit. LNG is formed by reducing the Natural Gas (NG) to − 162 °C. The volume of natural gas shrinks about 600 times as the liquid passes through the gas phase. Hence, a high volume of NG can be stored in the liquid state by reducing the volume 600 times under high pressures. LNG
makes it convenient to transport by ships and via cryogenic trailers in liquid form to be regasified at the final destination to the storage areas where it is not possible to transport the NG in pipelines technically and economically. Generally, LNG is preferred to NG because NG is not purified. LNG is purified from the oxygen, carbon dioxide, sulfur components, and water during the liquefaction process. This results in a purer and more efficient fuel than natural gas. Supply chain decisions include the location and the capacity of the facilities, quantity of products to be stored in various locations, transportation/distribution
* Durdu Hakan Utku, [email protected] | 1The Department of Industrial Engineering, University of Turkish Aeronautical Association, Etimesgut, Ankara, Turkey. SN Applied Sciences
(2020) 2:1496
| https://doi.org/10.1007/s42452-020-03297-7
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