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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ijpe.2005.04.007 Byline: Arkadej Pongsakdi (a), Pramoch Rangsunvigit (a), Kitipat Siemanond (a), Miguel J. Bagajewicz (b) Keywords: Refinery planning; Uncertainty; Financial risk management Abstract: Most models for refinery planning are deterministic, that is, they use nominal parameter values without considering the uncertainty. This paper addresses the issue of uncertainty and studies the financial risk aspects. The problem addressed here is that of determining the crude to purchase and decide on the production level of different products given forecasts of demands. The profit is maximized taking into account revenues, crude oil costs, inventory costs, and cost of unsatisfied demand. The model developed in this paper was tested using data from the Refinery owned by the Bangchak Petroleum Public Company Limited, Thailand. The results show that the stochastic model can suggest a solution with higher expected profit and lower risk than the one suggested by the deterministic model. Author Affiliation: (a) The Petroleum and Petrochemical College, Chulalongkorn University, Bangkok 10330, Thailand (b) School of Chemical Engineering and Materials Science, University of Oklahoma, Norman, OK, 73019, USA Article History: Received 5 June 2004; Accepted 20 April 2005

Most models for refinery planning are deterministic, that is, they use nominal parameter values without considering the uncertainty. This paper addresses the issue of uncertainty and studies the financial risk aspects. The problem addressed here is that of determining the crude to purchase and decide on the production level of different products given forecasts of demands. The profit is maximized taking into account revenues, crude oil costs, inventory costs, and cost of unsatisfied demand. The model developed in this paper was tested using data from the Refinery owned by the Bangchak Petroleum Public Company Limited, Thailand. The results show that the stochastic model can suggest a solution with higher expected profit and lower risk than the one suggested by the deterministic model. Keywords: Refinery planning; Uncertainty; Financial risk management