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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