MANSCIE TERM PROJECT TERM1.docx

8/9/2019 MANSCIE TERM PROJECT TERM1.docx

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MANSCIE TERM PROJECT:TRANSPORTATION MODEL

A Term Paper Presented to

Mr. Victor Reyes

In Partia !" #i mento# t$e Re%"irements in

MANSCIE& Term ' A( ')*+,')*-

yianca Da/is

A yssa DeytoRa$a0am Santos IV


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Company Pro#i e1 ac23ro"nd

Company Pro#i e

Petron Corporation (PCOR) is one of the three main oil refiners in the

Philippines. PCOR refines crude oil into various fuel products such as gasoline, jet fuel

and liquefied petroleum gas. The company mar ets and distri!utes the products mainly

to the domestic clients. The company"s refinery is located in #imay, $ataan, and it

sources !ul of its crude oil from %audi &ramco in the 'iddle ast. uel products are

distri!uted from the refinery to !ul storage terminals and direct consumer accounts

Nat"re o# "siness

Petron Corporation, an oil refining and mar eting company, processes crude oil into

a range of petroleum products. *ts products include gasoline, diesel, liquefied petroleum

gas (#P+), jet fuel, erosene, and industrial fuel oil, as ell as petrochemical feedstoc

!en-ene, toluene, mi ed ylene, and propylene. The company supplies fuel oil, diesel,

and #P+ primarily to industrial customers/ and supplies jet fuel at airports for

international and domestic carriers. *t also operates appro imately 0,011 service

stations retailing gasoline, diesel, and erosene to motorists and pu!lic transport

operators. *n addition, the company sells #P+ under the +asul and iesta !rand names

to households and other industrial consumers through a dealership net or /

manufactures and sells lu!es and greases/ and operates repair and maintenance


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centers for motorists. The company e ports various petroleum and non2fuel products to

the &sia2Pacific countries, such as %outh 3orea, Tai an, China, %ingapore, Cam!odia,

'alaysia, *ndonesia, 4ong 3ong, and Thailand. The company as founded in 5677 and

is !ased in 'andaluyong City, the Philippines. Petron Corporation operates as a

su!sidiary of % & Refinery Corporation.

Ind"stry Pro#i e

The collapse of the Philippines" economy due to an oil crisis in 5685 forced the

ilipino government to recogni-e the petroleum industry as vital to the country"s

economic sta!ility and to !egin ma ing plans to ta e control of the sector. &t the same

time, the government sought to replace the foreign dominance of the country"s fuel

mar et ith Philippine2o ned and controlled operations.

*n 9ovem!er 5687, the government, then led !y erdinand 'arcos, created a

ne !ody, the Philippines 9ational Oil Corporation (P9OC) ith the intention of

developing a full2range of petroleum2related operations, including refining, mar eting,

shipping, transporting, and storage. One month later, P9OC launched its refining and

mar eting ing hen it acquired sso Philippines22mar ing the end of sso"s

involvement in the country22and the refining and mar eting operations of iloil. sso

Philippines as then renamed as Petrophil Corporation.

P9OC also !ought up a controlling sta e in $ataan Refining Corporation,

completing that acquisition in 56:7. $y then, P9OC had already esta!lished the Petron


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name. The government continued to regroup its petroleum industry operations, merging

$ataan Refining Corporation into Petrophil in 56:;. T o years later, Petrophil

adopted the name of Petron Corporation.

$y then, Petron had ta en a major share of the Philippines" petroleum mar et,

particularly after !oth 'o!il and +etty e ited the country in the early 56:1s, leaving only

%hell and Calte , !oth of hich had !een among the pioneers of the country"s

petroleum mar et. The company as particularly strong on the retail mar et, ith 611

service stations and one2third of the total retail mar et. Petron"s refinery operations, ith

a total capacity of 5;;,111 !arrels per day at the time, ere running at just 77 percent of

that total, ho ever. 9onetheless, the company remained highly profita!le.

The fall of the 'arcos regime and the creation of a ne government under Cora-on

&quino led to calls to privati-e many of the industries that had !een ta en over !y the

'arcos government. Petron appeared to !e first up to !at, to the point here the

government hired Citicorp to act as a consultant. The initial proposed called for the

government to retain a 7; percent share of the company, selling the remainder in a

pu!lic offering, ith a limit of


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Or3ani4ationa C$art


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De#ine t$e Pro0 em

S5OT 6Stren3t$& 5ea2ness& Opport"nity& T$reat7 Ana ysis

%trengths

The strengths of Petron ould refer to its products and services. *t=s ell2 no n

for the quality of its products such as &utomotive uels, &utomotive #u!ricants,

#iquefied Petroleum +as, and *ndustrial Petroleum Products. %ervices provided include

the Petron Car Care Center, Petron #u!e Center, Petron 'otocenter, One2%top %ervice

Convenience, and Petron Cards.

>ea nesses

>ea nesses may refer to the lac of a!ility to further minimi-e the queues of

customers in different stations and service centers.

Opportunities

Petron has recogni-ed the opportunity in increasing mar et share and profit as

they partner2up ith other programs such as the %' &dvantage, %' Prestige, and $?O

Re ards in order to reach out to their sta eholders.

Threats


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Threats to the company may refer to the sudden changes and fluctuations in oil

prices from different e porters orld ide.

Pro0 em Statement

*n order for a company=s product to !e a!le to reach more people, they should

ma e it more availa!le in a larger mar et and provide a level of convenience to their

consumers. *n order for them to do this, they have a delivery service to !e a!le to !ring

their product to their consumers. Thus, the pro!lem to solve is to minimi-e the delivery

costs.

Scope o# t$e Pro0 em

%ince the pro!lem presented to the group as ho to minimi-e the cost of

delivering oil from the oil depots and terminals to the gas stations, they decided to

narro do n the pro!lem and given data to ma e it easier to formulate a model. The

group chose three oil depots hich ere located in metro manila and three gas stations

located at metro manila as ell. The oil depots and terminals they chose ere located in

Pandacan, 9avotas, and Pasig/ hile the three gas stations in 'untinlupa, @ue-on City

and Pateros.


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De8e op a Mode

The group chose to use a transportation model to present the data they ere

a!le to collect and the minimum cost of delivery from the three oil depots to the three

gas stations. This model is the most appropriate model for the pro!lem that ill provide

the optimal solution. &lso, it is quite easy to understand !ecause it is presented in a

ta!le form and the method used for solving is also easy to learn.

O09ecti8es o# t$e Mode

&side from the main o!jective hich is to sho the minimum cost of the delivery

of gasoline, the group also had other goals in mind hen they chose this model. The

first is to !e a!le to present the pro!lem in the most appropriate manner. Asing this

model, the readers ould easily understand and analyse the pro!lem. %econd is to

clearly see to clearly see and incorporate all the data needed.

Scope& Limitations and De imitations


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$ecause Petron Corporation have 70 oil depots and terminals and almost 0,111

gas stations all over the country, the group only chose to focus on three oil depots and

three gas stations all located in the 9ational Capital Region. The group only !ased the

model on the data they ere a!le to acquire during the data gathering procedure. They

did not ta e in consideration anymore other factors aside from the supply of the three oil

depots, the demand of the three stations, and the cost of transportation.

Ac%"ire Inp"t Data

Inp"t Data Re%"irements

The input data required for this model are the amount of gasoline !arrels each oil

depotB terminal can supply. %ince these depots get their supply from the $ataan

Refinery, their supply of gasoline is limited. %econd is the amount of gasoline the three

gas station demands. &nd last is the cost of delivering gasoline from each depot to each

gas station.

Data at$erin3 Met$odo o3y

The data gathering method that the group used is intervie . They intervie ed a

manager from Petron=s *T department ho monitors the delivery of gasoline from one

point to another. 4e also inspects oil depots and the facilities used in delivering gasoline

to ma e sure the consumers get hat they e pect out of the company. >ith the help of

this manager, the group as a!le to identify a pro!lem they can or on, come up ith

a model they can use, and compile the data they need to input to the chosen model.

&side from the intervie the conducted, they also did research on ho they can


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appropriately present the pro!lem and the model. This research also helped them find

the easiest ay to create an initial solution and find the optimal solution.

S"mmary o# Data

The follo ing ta!les sho the data needed that the group as a!le to gather.

Ta!le 5 The num!er of

!arrels each oil .Ta!le 0 The num!er

of !arrels each

depotB terminal can supply

gas station is demanding

Ta!le 7

+&% %T&T*O9%

? '&9?

'untinlupa 711 !arrels@ue-on City 011 !arrelsPateros 011 !arrels

O*# ? POT%B

T R'*9% %APP#D9avotas 511 !arrelsPandacan 711 !arrelsPasig 711 !arrels

RO' 2 TO

CO%TB !arrel

(Php)9avotas to

'untinlupa

;

9avotas to @ue-on

City

MANSCIE TERM PROJECT TERM1.docx

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