Financial risk management in the planning of refinery operations [An article from: International Journal of Production Economics]

This digital document is a journal article from International Journal of Production Economics, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
Most models for refinery planning are deterministic, that is, they use nominal parameter values without considering the uncertainty. This paper addresses the issue of uncertainty and studies the financial risk aspects. The problem addressed here is that of determining the crude to purchase and decide on the production level of different products given forecasts of demands. The profit is maximized taking into account revenues, crude oil costs, inventory costs, and cost of unsatisfied demand. The model developed in this paper was tested using data from the Refinery owned by the Bangchak Petroleum Public Company Limited, Thailand. The results show that the stochastic model can suggest a solution with higher expected profit and lower risk than the one suggested by the deterministic model.