Sustainable refined products supply chain: A reliability assessment for demand‐side management in primary distribution processes

Abstract

The reliable operation of the primary distribution of refined products supply chains is crucial in guaranteeing the demand for retail markets. The uncertainties such as demand, production, and inventory will affect the supply chain operation. However, there lacks literature that studies the reliability of demand‐side management of refined products supply chains. This reliability assessment can help define the weak points and boost the performance of the supply chain. And it can help decision‐makers to improve the satisfaction of retail markets. In this paper, a systematic method for comprehensively assessing the reliability of refined products supply chains is proposed. At first, a mathematical programming model is developed to get the distribution plan of refined products. Then, several scenarios such as increasing demand, decreasing production, refineries disruption, and pipeline interruption relevant to the real situations of refined products supply chains are defined. Besides, indices including satisfaction rate, number of dissatisfied retail markets, refined products shortage, shortage of a single retail market, and average shortage duration are proposed to evaluate the reliability of the demand‐side management in primary distribution processes. At last, the Monte Carlo simulation is adopted for a comprehensive analysis combining all the scenarios. This analysis shows a clear picture of the influence of uncertainties. This method is applied to assess the reliability of demand‐side management of a real refined products supply chain. After analyzing different scenarios, the average probability of dissatisfaction under the reference scenario came as 1.93 × 10−4/day that means one day in around 14.2 years could have refined products shortage. This method can also help decision‐makers to assess other primary distribution of refined products supply chains.

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