Omya Hustadmarmor optimizes its Supply Chain: Delivery of calcium carbonate slurry to european paper manufacturers
Seminar paper from the year 2007 in the subject Business economics - Operations Research, grade: 1,4, Leipzig Graduate School of Management, course: Success Stories in Operations Research, 31 entries in the bibliography, language: English, abstract: This paper addresses a shipments-planning problem faced by Omya Hustadmarmor, a producer of large volume slurry products. From a single producing plant with limited production and tank storage capacity, multiple products are transported by different vessels to a number of tank farms that also have limited inventory capacity. The objective is to minimize the total distribution cost such that capacity constraints are not violated, i.e. neither stopping production at the plant, nor running out of stock at the tank farms. This Inventory-Routing Problem is solved by the use of a mixed integer-programming model and the application of a metaheuristic approach to obtain optimal solutions. At the company, the solution method was implemented successfully in a Decision Support System and resulted in a much more flexible and predictable supply chain. Today’s business environment is characterized by an increasing complexity in manufacturing and supply chain management (Booth 1996). Huge numbers of choices and persistent time and margin pressures make managerial decisions more difficult. In addition, new enterprise applications and software are generating overwhelming amounts of data. Turning this data into decision-supportive information by applying theoretical models in practice is one of the tasks of Operations Research (Robinson 2000). For almost 35 years, the ‘Institute for Operations Research and Management Sciences’ (INFORMS) honors extraordinary practical achievements and success stories in Operations Research with the ‘Franz Edelman Award’. By bringing together top examples of innovation from different international organizations, the possibilities of Operations Research should be demonstrated and serve as a continuous source for new ideas and optimization. Among the finalists of the 2006 ‘Franz Edelman Competition’ is the European company Omya Hustadmarmor.
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Appendix calcium carbonate slurry Christiansen company’s Cost savings decision problem Decision Support System demand direct shipping distribution planner economies of scale efficient distribution plan first-tier tank farms fleet utilization Franz Edelman Gallego and Simchi-Levi genetic algorithm greedy heuristic Hence horizon of 28 Hustadmarmor’s supply chain improved innovative inventory cost inventory levels inventory planning Inventory-Routing Problem Inventory-Routing-Problem large vessels linear mixed-integer Liquefied natural gas long-term Marine inventory routing minimizing Molde University Multiple products natural gas nonlinear objective function Omya Group Omya Hustadmarmor Omya’s operational challenges Operations Research optimal solution paper manufacturers paper mills pipelines planning horizon planning tool plant potential problem characteristics product mix production planning replenishment result Ronen safety stocks savings and quantitative shipment quantities significantly slurry variants spot market storage capacity Suez Energy supplier supply chain management tank vessels team of Molde third-parties transportation cost transportation plan unit at retailer variables vessel schedule