A mixed-integer programming model for gas purchase and transportation

The natural gas supply chain involves three main agents: producers, transportation companies, and local distribution companies (LDCs). We present a MIP model that is the basis for a decision support system developed for a Chilean LDC. This model takes into account many of the complexities of the purchasing and transportation contracts to help optimize daily purchase and transportation decisions in the absence of local storage facilities. The model was solved to optimality within a reasonable time. We show how the model handles several contractual issues and gives some insights for the case when demand scenarios are used to deal with uncertainty.