April 2003

Inventory Management

Value proposition for oil accounting – Part 1

By deploying a sophisticated system, a refinery can reap benefits totaling hundreds of thousands of dollars/year

Grosdidier, P., Grodidier Consulting Services; McLaughlin, M., Aspen Technology, Inc.

Oil accounting is the business process of measuring, validating, reconciling and publishing all the flows and inventories into, within and out of a refinery. Its practice varies widely in the industry. Some refiners are content to use a spreadsheet to tabulate and compare shipments, receipts and inventory changes on a monthly basis. This simple business model is adopted by a few refiners who are only interested in matching physical quantities in and out of their plant to paper transactions. In effect, a monthly balance around the fence confirms that material invoiced corresponds to measured physical quantities, and nothing more substantial is asked of the oil accounting process. Indivi

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