STRATEGIC-PLANNING OF TRANSPORTATION SERVICES FOR PETROLEUM-PRODUCTS - AN APPLICATION OF CAPACITATED GRAVITY MODELS

Strategic planning of physical facilities and pricing of services for the distribution of petroleum products require a comprehensive conside ration of the alternative means by which the products can be shipped t o consumers from refineries, a mechanism for estimating the percentage of volumes that would be shipped via each alternative, and an assessm ent of the financial impact of changes in physical configurations and tariff structures of the distribution networks. Capacitated gravity mo dels were created by adapting multiplicative competitive interaction ( MCI) models for market share to accommodate capacity constraints at in dividual facilities and the aggregate capacity of groups of facilities served by the same pipeline segment. Procedures for calibrating the m odels were developed to cope with the problem of having only partial i nformation about competitors' deliveries. Described in this paper are the structure of the models, calibration procedures, and their applica tion to corporate planning in a large independent pipeline company whi ch serves the midcontinental U.S. as a common carrier of refined petro leum products.