Shipment and charter planning: a case of a Korean oil refining company

This paper introduces a maritime shipment and charter planning problem motivated from a leading oil refining company in Korea. The real-world problem is to determine an oil shipment and charter planning (OSCP) for heterogeneous tanker ships with multiple compartments for different types of oil products from a refinery to tanker depots in seaports. An integer programming model is developed to solve the problem with the objective of minimising depot inventory and quantity-discount transportation costs. Scenario analyses draw managerial implications based on past oil shipment records of the company. The analyses show that variations in demand and transport rates are likely to significantly impact transportation costs, and quantity-discount transport rates can become the reason for large inventory fluctuations in oil products at the tanker depots. Finally, we demonstrate the ability of the optimisation approach to get potential cost-saving opportunities from chartering decisions and inventory management.