Production and Operations Mangement

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Production and Operations Management

1. Analyze Marathon’s product process and determine which phase is open to the greatest number of efficiency improvements. Explain your rationale. Marathon has contracts with Very Large Crude Carriers (VLCC) that transport crude oil from various overseas locations to the Louisiana Offshore Oil Port (LOOP). These VLCCs are capable of carrying an average of two million barrels and can take 36 to 48 hours to unload at LOOP. The crude oil is transported through a 48-inch undersea pipeline to either eight underground salt caverns with approximately 50 millions barrels storage capacity or to 600 thousand barrels of above ground storage. (Marathon Petroleum Company LLC) From there the crude oil is distributed through four pipelines to refineries in the Gulf Coast and Midwest. Marathon has access to 9,600 miles of pipeline in the U.S and transports 1,700,000 barrels per day of crude oil. (Marathon Petroleum Company LLC) One of these pipelines is called LOCAP which is a pipeline that connects the LOOP to the Capline Pipeline. This 40-inch, 667 mile pipeline runs from St. James, LA to the Midwest hub in Patoka, IL. The crude oil moves about 4 miles an hour and can take 8-10 days to arrive at the refinery. The Capline Pipeline transports up to one million barrels of crude each day. (Marathon Petroleum Company LLC) At the refinery it will take four to eight days before the crude will be processed into gasoline, diesel fuel, and other petroleum products, such as fuel oil, kerosene, asphalt, jet fuel, toluene, xylene and benzene. (Marathon Petroleum Company LLC) These products will then be sent to the light product terminals through product pipelines which usually take three to four days, but can take up to 50 days. Marathon has 4,000 miles of product pipeline that is helping to bring supply into the product-short…...

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