Implications of capacity expansion under uncertainty in oil industry

A multi-period stochastic planning model with finite number of realizations has been developed and implemented for a supply and distribution network of a petroleum organization operating under uncertain market conditions. In this paper, we present the analysis of capacity expansion under uncertainty from the viewpoints of the decision making process on the optimal allocation of investment. The optimization model is developed using real data from oil industry and described an actual petroleum products distribution system as a case study. The developed model could be regarded as an applicable tool for decision support to provide a better understanding in planning and policy analysis.