An O(T³) Polynomial Algorithm for Crude Oil Transportation

Abstract : Crude oil transportation is a central logistics operation in the petrochemical industry because the transportation cost of the crude oil represents a significant part in the cost of petrochemical products. In this paper, we consider the transportation by tankers or trucks. We show that under some realistic assumptions, this problem can be transformed into a single item lot sizing problem with limited production and inventory capacities. We develop a strongly polynomial dynamic programming algorithm to solve this latter problem. The main contribution of the paper are: 1) application of lot sizing models to the transportation problem; 2) an O(T³) algorithm is proposed to solve this problem; 3) the results obtained are not limited to the maritime transportation problem and can also be applied to the vehicle transportation problem in direct delivery case.