A robust model for supplying LNG from different contracts considering overall and incremental discount options

ABSTRACT

In order to transport natural gas to long distances, it is economical that the natural gas is converted into the liquefied natural gas (LNG). Several countries look forward to conclude the contract for purchasing LNG. In the present research paper, it was assumed that a customer (country) would be provided LNG due to its high demand for a long period. Different contracts that include overall and incremental discount options have been offered to the customers by different vendors. In addition, the customer may consider meeting a certain part of the demand from the spot market. Three factors are important while concluding the LNG contracts: the evaporation rate, the quality, and the operational costs. In the present study, first, the best level of each factor was concluded by utilizing the LINMAP method, following which a robust model was presented in order to determine the amount of LNG that should be purchased from each contract as well as from the spot market. The mathematical model was tested through a numerical example which included 10 contracts with different options.

KEYWORDS:

• Liquefied Natural Gas (LNG)
• LINMAP
• robust optimization
• mixed-integer linear programming

Acknowledgments

The authors would like to thank the anonymous reviewers and the editor for their insightful comments and suggestions.

Additional information

Notes on contributors

Amir Karbassi Yazdi

Amir Karbassi Yazdi received his PhD of Industrial Management major in Operations research from Islamic Azad University, South Tehran Branch, Tehran, Iran. His research interests are in operations research, multi-criteria decision making, mathematical modelling, fuzzy sets, optimization and so on.

Alireza Rashidi Komijan

Alireza Rashidi Komijan is an associate professor of industrial engineering. He received his PhD from Islamic Azad University in 2009. His major is operations research and focuses on mathematical modelling, specifically air transportation and energy related models. His interest field is large scale scheduling problems.

Sadigh Raissi

Sadigh Raissi, PhD, is an associate professor at the School of Industrial Engineering, Islamic Azad University, South Tehran Branch(IAU-STB). He obtained his PhD, also masters and bachelor's degrees in industrial engineering. He has been engaged in industrial systems engineering technology development and the technical consultant from 1988 up to the present. He was worked in different management positions, both in private and public sectors; the last one was deputy of research and planning at IAU-STB. By his attempts, than 10 scientific journals initiated and research activity facilitated. Currently, Dr.Raissi is also acting as Editor-Chief of the journal of Industrial Engineering International(JIEI), a Springer open journal. He has published more than 150 research papers at yet. His main research fields are quality & reliability engineering, system simulation, and statistical methods in engineering.

Mahmoud Modiri

Mahmoud Modiri is an assistant professor of Islamic Azad University, South Tehran Branch, Tehran, Iran. He received his PhD in Industrial Management major operations research from Science and Research Branch of Islamic Azad University, Tehran, Iran in 2005.His research interests are mathematical modelling, optimization, Multi-Criteria Decision Making, Fuzzy and Grey Logic, Data Envelop Analysis and simulation.