| The steadily increasing worldwide demand for oil and petrochemicals has enabled companies providing these products to reach more customers and increase their market share and profitability. This boom in global demand, along with the ease of international trade, has made the supply chain in this industry more complex and more challenging than in others (Coia, 1999). However, despite this growing complexity, the industry has not yet developed new methods to manage its supply chain more efficiently. In fact, according to Steve Welsh, a managing director of the College of Petroleum and Energy Studies at the University of Oxford, the oil and petrochemical industry's insight into the supply chain is still in its infancy (Schwartz, 2000).; In an effort to manage their supply chain and reduce costs, oil and petrochemical companies are outsourcing1 their logistics2 functions. As the trend in outsourcing has grown, these companies have become increasingly reliant on the services of third-party3 logistics companies for managing their supply chains (Collins, 1999). They have recognized that it is the supply chains in which they participate that are competing with one another, rather than individual companies.; Currently, no specific method has been adopted when petrochemical companies should attempt to make a swap decision. An interview with several supply chain directors in two international petrochemical companies that have been involved in swapping with their competitors for the past few years revealed that judgmental 4 methods and the use of spreadsheets are the main approaches utilized. Although judgmental approaches may improve accuracy in many decision-making problems such as forecasting5, they should not be the only methods employed. The use of such approaches cannot guarantee an optimal solution.; Accordingly, this dissertation develops a mathematical model that can be used in supply chain networks, specifically in the oil and petrochemicals industry, where collaboration among competitors exists. (Abstract shortened by UMI.); 1Outsourcing takes place when an organization transfers the ownership of a business process to a supplier. 2Logistics is the process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw material, in-process inventory, finished goods, and related information from point of origin to point of consumption to conform to customer requirements (Council of Logistics Management, 1998, p.2). 3Third-party logistics is the use of an outside company to perform all or part of the firm's materials management and product distribution function. 4A judgmental method is the use of people's opinions when making decisions. 5Forecasting is the art and science of predicting future events. |
