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# 

APPLICATION OF
OPERATIONS RESEARCH
 IN MRPL

 MBA(ET)
Content
 Introduction

 Challenges

 LP Models

 Benefits

##  Key to successful implementation

Introduction
 Mangalore Refinery and Petrochemicals Limited
(MRPL), located at Katipalla, Mangalore
 It deals in petroleum product
 It had a turnover of US\$ 8 billion during last year
 The refinery is processing about 12.5 million
tonnes of crude per year
Introduction to Operation Research

##  Operational research, also known as operations

research, is an interdisciplinary mathematical
science that focuses on the effective use of
technology by organizations.
 Employing techniques from other mathematical
sciences --- such as mathematical modeling,
statistical analysis, and mathematical optimization
--- operations research arrives at optimal or near-
optimal solutions to complex decision-making
problems.

CONTD.
 Operational research encompasses a wide range of
problem-solving techniques and methods applied in the
pursuit of improved decision-making and efficiency.
 Some of the tools used by operational researchers are
statistics, optimization, probability theory, queuing
theory, game theory, graph theory, decision analysis,
mathematical modeling and simulation.

Challenges
Ø Crude selection
Ø Crude transportation
Ø Crude processing
Ø Product demands
Ø Profit Maximization
LP Model
 LP model contains the end-to-end configuration of the
refinery with a detailed representation of primary and
secondary processing units, blending facilities, power
and utilities.
 The model can have different time period variants to meet
different planning objectives associated with Annual
Planning (1X4 quarter), Quarterly Planning (1X3
months) and Monthly Planning (1X4 weeks).

Contd
 Thismodel represents an LP matrix with 1,500
rows, 3,500 columns, 1,500 equations, 1,500
constraints and 5,000 variables.

Objective Function in
an LP Model
 A refinery LP model has a single objective function of
maximizing the profit as below:
q To maximize {S (Product value) - S (Raw Material cost) -
S (Refinery Variable Costs)}
 STC
 Inventory value
 Carrying cost parameters
Variables
The common variable includes:

## Ø Crude oil prices and minimum and maximum availability

Ø Selling prices and minimum and maximum demands for
the different finished goods
Ø Available process unit capacities
Ø Available Inventory stocks and minimum and maximum
storage limits
Ø Quality specifications
Output
Ø The LP matrix generator transforms the input data into a
great number of equations and variables.
Ø The LP optimization algorithm solves the matrix and
calculates which combination of supply, processing,
blending and selling activities gives the highest margin.
Ø Then it combines this activities together with the
financial results to give the profit maximization.
Contd
 The output is generated in the form of different
types of text and Excel files. The reports contain
detail output with respect to crudes quantities,
product numbers, capacity utilization, power,
utilities and chemical consumption levels and
profit maximization.

Benefits
 An LP solution helps in achieving key practical aspects:
Ø It helps in the decision-making process
Ø It provides the targets and operating strategies for the
actual operation
Ø It acts as a watch dog for the refinery operations
Ø It clearly tells the inefficiency of operations in terms of
money
Ø
Key to successful implementation

## Ø Regular Model updates and maintenance

Ø Integrated application of different software
solutions
Ø Clear and well documented planning
procedures
THANK YOU