Case description PetroRefine SA, a petroleum refinery company, is reviewing its global strategy. The company has seen recently its global demand changing over the last few years. In addition, the environmental regulations are imposing additional constraints to reduce its emissions. The Company has 5 refineries in different places in the world. Some of the refineries are old and are very polluting while others are more recent and are using new technologies and therefore less polluting in terms of GHG emissions, and in particular CO2. However, the fixed cost of the more recent refineries is higher due to the recent investments in the new technologies that require costly preventive maintenance operations. The Vice president for Supply Chain Management is considering revisiting the company's facilities. The options include closing some of the existing refineries with their current (low) capacities, upgrading the existing refineries with higher capacity, opening new refineries equipped with the new technologies and with larger capacity for better economies of scale, and more importantly opening a refinery in Nigeria, the main oil-producing country in Africa. Nigeria, is the main source of crude oil for the whole network of PetroRefine SA. The option of opening a new refinery in that country is part of its Corporate Social Responsibility to contribute in the development of that country by paying local tax on its activities and hiring local employees. In case the company decides to upgrade the capacity of an existing refinery, then the old (existing) capacity will not be available, i.e. either the old or the upgraded capacity is to be used and not both at the same time. For Nigeria, two options for the capacity are also available and one of them at most should be chosen. 1- Use the following data in order to help PetroRefine SA re-design its the supply chain of refined petroleum including the locations and capacities of its of refineries and the shipped amounts per year between the refineries and the storage tanks. Make sure that the demand is fully satisfied. Inputs Costs Capacises, Demands Production and Transportation car per barrer Fothe refineries to the storage tanks Buenos Roterdam Existingtow Capacity Fixed Cost Upgraded High Capacity Netherlands Shangha Libreville (1000%/year Capacity (Milion Fixed Cost Capacity in Millice Supply Retneries Norfolk (USA) (Argentina) China Gabon barrels year (1000) barrels year) Houston (USA) 250 310 420 380 50.000 75,000 12 Rio de Janeiro (Brad) 220 100 320 450 200 250,000 30 375,000 40 Marselles (France) 400 420 320 450 380 280.000 30 420,000 35 Shenzen (China) 250 300 200 150 210 180.000 20 270.000 2 Alplers (Alpena 210 230 190 240 140 80.000 120 000 300 310 400 200 5000209 Demand MY barrels per year) 35 7 32 15 Formulate a Mixed Integer Program ad solve it using Excel Solver. 2- Even if opening the refinery in Nigeria is not economically optimal, PetroRefine SA Vice President would like you to propose a supply chain design in which a refinery is built and operated in Lagos. Propose a supply chain design in which Lagos refinery is part of PetroRefine SA with one of the capacity levels proposed in the table above. Compared to the optimal solution of the first case, what would be the additional cost, that can be considered as the social contribution of PetroRefine SA to support Lagos as part of its Corporate Social Responsibility. Formulate a Mixed Integer Program ad solve it using Excel Solver. 3- As part of an environmental policy, PetroRefine SA would like to explore the possibilities of minimizing the CO2 emissions from its production and transportation operations, while satisfying its demand, regardless of the impact on its cost. Propose a supply chain network design that minimizes the CO2 emissions of the company while satisfying the demand while using the same capacity options as above, including the site of Lagos. Use the data provided in the table below. Inputs - CO2 emission from transportation and production, Capacities, Demands CO2 emissions per barrel (Kg/barrel) from the transportation between the refineries and the storage tanks Existing Low Capacity CO2 Emissions from the Buenos Rotterdam Aires Production (Netherlands Shanghai Libreville operations Capacity (Million Supply Refineries Norfolk (USA) (Argentina)) (China) (Gabon) (Kg/year) barrels/year) Upgraded High Capacity CO2 Emissions from the Production operations Capacity (in Million (Kg/year) barrels/year) Houston (USA) Rio de Janeiro (Brazil) 3 12 15 30 15 5,000 5 12,000 12 11 5 13 32 18 60,000 30 80,000 40 Marseilles (France) 14 15 6 19 17 15,000 30 17.500 35 n Shenzen (China) 32 40 34 4 20 60,000 20 84,000 20 Algiers (Algeria) 19 22 19 31 14 24,000 12 36,000 New Lagos (Nigeria) 18 19 14 30 3 3,500 4,000 Demand (in Million barrels per year) 35 7 32 15 Formulate a Mixed Integer Program ad solve it using Excel Solver. 4- Calculate the total emissions per year from the economic solution (in (1)) and the total cost of the environmental solution (in (3)). Discuss these results