(468e) Risk Asessment in Refinery Operations Planning Under Demand Uncertainty and Product Pricing

Typical commercial planning models are linear and deterministic, that is, they consider just one input set of projected demands and prices.

Prices of products can be manipulated and there is clear advantage in doing so many times. For example, when storage capacity of certain products is such that crude processing is limited, one can reduce prize to move inventory away and increase throughput. In simpler cases, cheaper crudes may not match the demand profile and therefore reducing price to move some materials faster could be beneficial.

In this paper, we consider the classical LP planning model to which we added price-demand relationships and we therefore made those two variables instead of targeted demands

While looking at decision making in view of uncertainty, we consider the parameters of the price-demand models uncertain and we implemented a two stage stochastic model that can allow decision making. Prices and crude purchases are first stage variables,

We will also show how financial risk can be managed using this model.