Coordination of refinery production and sales planning

Abstract

Coordination of activities in the supply chain is important in order improve the overall performance. The best approach is to use integrated planning of such activities. However, in many cases it is not possible to use integrated planning as the planning models themselves are to difficult to solve or manage. A second approach is to exchange information where some characteristics of the second activity is included in the planning of the first activity. In a pure push or pull logistic planning it is possible to only transfer information in one direction. However, in cases where there are problems to meet some specific demands it is necessary to transfer more information for the coordination. In this paper we study the performance of the coordination between refinery production planning and sales planning of finished products. We show limitations in existing approaches and propose a new approach where additional information is shared. We show with some illustrative numerical experiments that the performance is improved. In addition, the proposed approach is based on theoretical sound decomposition principles.