A computerized facility planning system for the oil industry

The paper describes a study which was undertaken in the Egyptian Petroleum Industry. It attempted to develop a system that would aid top management in making a decision of primary importance: What is the optimal location for establishing a new warehouse? It was believed that such a system would result in large savings in distribution costs and could facilitate the operating problems in the existing warehouses.The initial run of the system was performed without introducing any of the new prospective locations into the distribution network. This resulted in a complete plan for the distribution pattern of crude oils and petroleum products. A second run was performed after introducing all prospective warehouse locations into the distribution network. The result was a different distribution pattern with one location chosen as the optimal location for the new warehouse.In the final stage, costs were calculated for the original plan and the modified one. Economic and other factors pertaining to the establishment of the new warehouse were discussed, and conclusions were drawn as to the effectiveness of the proposed system in providing management with better means of making the location allocation decision.