An integrated MINLP model for multi-party coordination in downstream oil supply chain

Cooperation among enterprises can bring overall and individual performance improvement, and a smooth coordination method is indispensable. However, due to the lack of customized coordination methods, cooperation in the downstream oil supply chain cannot be carried out smoothly. This paper intends to propose a multi-party coordination method to promote cooperation between oil shippers and pipeline operator by optimizing oil transportation, oil substitution and pipeline pricing schemes. An integrated game-theoretic modeling and analysis approach is developed to characterize the operation behaviors of all stakeholders in the downstream oil supply chain. The proposed mixed integer nonlinear programming model constrains supply and demand capacity, transportation routes, oil substitution rules and pipeline freight levels. Logarithm transformation and price discretization are introduced for model linear approximation. Simulation experiments are carried out in the oil distribution system in South China. The results show that compared to the business-as-usual scheme, the new scheme saves transportation cost by 3.48%, increases pipeline turnover by 5.7%, and reduces energy consumption and emissions by 7.66% and 6.77%. It is proved that the proposed method improves the revenue of the whole system, achieves fair revenue distribution, and also improves the energy and environmental benefits of the oil supply chain.