Optimum multi-period, multi-plant, and multi-supplier production planning for multi-grade petrochemicals

A multi-period production and inventory control problem for a multi-grade, multi-supplier petrochemical product is formulated as a Mixed Integer Linear Program (MILP) and then optimally solved. Raw materials are available from several suppliers, and several plants (chemical reactors) are used for making the petrochemical product. Several grades of the petrochemical product can be produced by changing the conditions inside each reactor. During transitions from one grade to another, certain amounts of off-spec material are produced. The quantity of off-spec production is sequence dependent, i.e. it depends on the two grades between which the transition takes place. The objective is to maximize the total profit, which is equal to the sale revenue of all regular grades and off-spec materials, minus the raw material costs and inventory holding costs.