Raw material supply strategy for petrochemical process under market uncertainty

In the petrochemical industry, raw material supply is a very important consideration that directly affects the operating condition and profit of the process. In particular, due to fluctuation in raw material price, there can be a huge difference in profit with the same amount of raw material procurement. However, due to various uncertainties regarding price fluctuation, it is very difficult for decision makers to arrive at an optimum supply strategy. In this study, we tried to establish an optimal supply strategy for petrochemical process considering the price uncertainty of naphtha and crude oil. To consider price uncertainty, we construct a system dynamics model to predict fluctuation of “crack,” which is the price gap of naphtha and crude oil. Based on the system dynamics model, comparative analysis and optimization of naphtha purchase and production from crude oil were performed. Since the forecasting model focused on the rising and falling of the price gap rather than absolute numbers, it was more helpful in establishing short-term supply strategies. The developed supply strategy shows improved cost saving compared with the conventional supply model.