that may have been chosen in the unrestricted configuration. Again, the model was
optimized with these new costs.
The recursions and solutions were repeated until no further cost, configuration,
or size changes were required. All the items described above were carried out in a
single computer run, and this solution was saved on tape and reported. Close
scrutiny of the results then followed to make sure that they were reasonable and
that there was no automatically restricted unit that might have been selected had a
different solution path been used.
A second step was then commenced which restored the solution of the first step
based on the average cost to the computer. The investment costs for the configuration were then recalculated using the incremental cost concept. This incremental
cost required no return on investment, and an infinite economic life was assumed
for the units. The only costs that were recognized in this step were the incremental
maintenance for each unit. Therefore, the building costs did not economically
suppress the size of units or the total investment. The unit sizes and total investment
were optimized on the premised product slate and available raw materials. A similar
recursive step was again used, but this time it included only the incremental
maintenance cost.
The model contains a variable that carries the sum total of the investment. This
variable is updated at the same time as the unit costs are updated by the recursive
operations described. Using this total investment variable, it was possible to step
down (parameterize) on the total investment, until a feasible solution was no longer
possible. An infeasible solution in this context is that in which the cash flow for the
configuration becomes less than zero.
As the total investment is reduced, the unit sizes, the product slates, and the raw
materials are changed within the framework of the overall premises. Therefore, by
this parametric sweep, the refinery configurations (both in size and form) could now
be found which would satisfy the following requirements:
• Maximum investment
• Maximum return on investment
• Maximum expected cash flow
• Minimum investment
The results of each parametric step were reported and documented.
Solution Analysis
Besides the specially designed report writing technique already discussed, the LP
also has a standard number of solution reports, and these are generally of a more
technical nature. Although of great value, they do not readily lend themselves to
immediate and apparent interpretation. It is imperative, however, that some members of a team using an LP can read and interpret these outputs, particularly as one
major use of these reports is to highlight any obvious errors that may have been
Petroleum Refinery Planning and Economics
781
optimized with these new costs.
The recursions and solutions were repeated until no further cost, configuration,
or size changes were required. All the items described above were carried out in a
single computer run, and this solution was saved on tape and reported. Close
scrutiny of the results then followed to make sure that they were reasonable and
that there was no automatically restricted unit that might have been selected had a
different solution path been used.
A second step was then commenced which restored the solution of the first step
based on the average cost to the computer. The investment costs for the configuration were then recalculated using the incremental cost concept. This incremental
cost required no return on investment, and an infinite economic life was assumed
for the units. The only costs that were recognized in this step were the incremental
maintenance for each unit. Therefore, the building costs did not economically
suppress the size of units or the total investment. The unit sizes and total investment
were optimized on the premised product slate and available raw materials. A similar
recursive step was again used, but this time it included only the incremental
maintenance cost.
The model contains a variable that carries the sum total of the investment. This
variable is updated at the same time as the unit costs are updated by the recursive
operations described. Using this total investment variable, it was possible to step
down (parameterize) on the total investment, until a feasible solution was no longer
possible. An infeasible solution in this context is that in which the cash flow for the
configuration becomes less than zero.
As the total investment is reduced, the unit sizes, the product slates, and the raw
materials are changed within the framework of the overall premises. Therefore, by
this parametric sweep, the refinery configurations (both in size and form) could now
be found which would satisfy the following requirements:
• Maximum investment
• Maximum return on investment
• Maximum expected cash flow
• Minimum investment
The results of each parametric step were reported and documented.
Solution Analysis
Besides the specially designed report writing technique already discussed, the LP
also has a standard number of solution reports, and these are generally of a more
technical nature. Although of great value, they do not readily lend themselves to
immediate and apparent interpretation. It is imperative, however, that some members of a team using an LP can read and interpret these outputs, particularly as one
major use of these reports is to highlight any obvious errors that may have been
Petroleum Refinery Planning and Economics
781