Contract selection and tank allocation in a terminaling and storage facility

Abstract

Chemical logistics play a key role in chemical supply chains. Terminaling and tank storage of liquid chemicals is a very common activity in the transport, use, and trading of chemicals. Efficient utilization of the available tank capacity at a storage terminal is a difficult combinatorial problem and is paramount in reducing costs for both the terminal operator and its customers. We present three multiperiod mixed-integer linear-programming (MILP) formulations for selecting contracts and allocating tanks to contracts in a typical storage terminal to maximize profit. One of the three models seems promising for managing a moderate-size facility. For managing larger facilities, we propose two heuristics. We illustrate our models and algorithms with a case study involving 27 tanks and 40 contracts. The heuristics give comparable solutions that are roughly 8-9% lower than the optimum solution. On one hand, they show the advantage of rigorous optimization, while on the other, they show that even these heuristics could represent significant savings compared to the manual procedures used in the chemical logistics industry. © 2005 American Chemical Society.