Production and Distribution Planning: Large cement manufacturer supplying to 10,000+ demand locations
The client was one of the largest cement manufacturing companies catering to the demand from more than 10,000 retail outlets and institutional customers. Inefficient production and distribution planning decisions resulted in escalated costs, uneven plant utilization and poor profit margins. The client planned to introduce the use of sophisticated optimization models for their monthly production allocation and distribution planning process to best utilize the production capacity and available distribution network.
CoreCompete was asked to develop an application to optimize monthly production quantities and distribution routing to fulfil the customer demand. The customer asked for a monthly report of revenue and cost incurred to allow senior executives to develop effective sales plans.
CoreCompete delivered the system in 2 phases over a 12-Week engagement. In phase 1 (proof-of-concept), optimization model was developed for solving relatively simpler business problems with reasonable assumptions to prove the value of the application of optimization models (using SAS/OR). In phase 2, CoreCompete delivered the application to optimize monthly production planning and distribution routing considering complex business and operational constraints making the model closer to reality. The application also produced a list of top distribution routes for each location ranked in the order of net contribution margin to help with manual decisions during the month.