A System Dynamics And Implementation of Inventory Policies

Cover A System Dynamics And Implementation of Inventory Policies
A System Dynamics And Implementation of Inventory Policies
Carl V Carl Verner Swanson
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Only the rapid increase in blending demand keeps the burning requirement low. Unfortunately, the butane system coordinator faces the possibility that a warm fall will depress the demand for butane. If lower blending rates are prolonged only ten days, butane capacity is exceeded. The peak in inventory comes at a time when there is no effective method for reducing supply and the probability of demand falling below supply is high. In addition we note that the burning of butane begins almost immedi...ately after the last shipment of butane from the Gulf Coast is received. Butane is being shipped from the Gulf in order to fill the inventory and then it is burned. A very similar story is seen in March of each year when butane reaches its lowest levels. At this time butane is nearly at the empty level of 30, 000 barrels (30, 000 barrels provides the minimum pressure needed to move butane out of the cavern). Here we see the desired level of butane inventory is 30, 000 barrels which gives no cushion to meet an unexpectedly high demand -19- or lag In the deliveries of butane.

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