Liquefied Natural Gas Annual Delivery Planning Problem: A New Optimization Model and Analysis

The Annual Delivery Program (ADP) for Liquefied Natural Gas (LNG) represents a complex maritime inventory-routing problem that requires the precise synchronization of production and distribution. This study introduces a novel Mixed Integer Linear Programming (MILP) model designed to optimize vessel routing and scheduling over a one-year horizon under a direct-shipment assumption. The model minimizes total logistics costs, encompassing both fixed annual fleet costs and daily operating costs. The novelty of the model can be summarized in two aspects. First, it simultaneously optimizes several decisions: the assignment of frequency of deliveries to customers, the assignment of vessels to customers, cargo load sizes, and vessel routing and scheduling. The key distinction is that, unlike existing formulations that take the frequency of deliveries to customers as a fixed parameter, this frequency is itself a decision variable selected from a customer-specific discrete set; the selected frequency partitions the planning horizon into uniform windows and sets each delivery’s cargo load size to the exact demand accumulated over its window from daily demand data. Second, it incorporates several relaxations of selected variables and valid inequalities that enable us to solve the complex model for moderate size problems within a reasonable computational time using the exact optimization approach. Using this novel model, we carried out extensive numerical analysis based on cost and operational parameter scenarios and developed important insights for the characteristics of a solution to the problem.