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Improvement proposal in the production and distribution of liquefied petroleum gas using optimization models

Abstract:

This research took place in a hydrocarbons manufacturing enterprise whose principal activity is the package and sale of Liquefied Petroleum Gas (LPG) in its different presentations: cans of 5Kg, 10Kg, 45Kg and 120Kg of propane, and the sale in bulk. The enterprise is located in the city of Lima, Peru and distributes the propane cans to all the districts on Lima and the neighbor cities of Huacho, Huaral and Barranca. This research wants to formulate and resolve an optimization problem that allows first to maximize the production utilities and then minimize the transportation costs for each propane can from the enterprise to all the places mentioned above, like so to determinate if it is feasible to send the products to Huacho, Huaral and Barranca. The investigation began with a study of the production process that includes the processes of storage of raw material and inputs; painting, weighment, filling and sealing of the cans; and leakage testing. Afterwards, data was collected about fixed costs, variable costs, selling prices and monthly sales volume. For the optimization stage of the products distribution, data was collected about capacities, demands and costs from all the places of destination. Based on the information gathered, two problems of optimization were formulated. Using LINGO software these optimization problems were solved developing a submission to maximize the production earnings and to minimize the transport costs for all the variety of products and for their sub varieties of weights.