An optimization-based application was developed to automate the tactical planning process in a complex beverage manufacturing plant. The application provides for fast analysis of utilization profiles of various assets involved in the beverage production. This exercise is critical in supporting capital expenditure decisions and in decisions relating to processing additional raw-material over and above the amounts forecasted previously that may be available at a cheap price due to sudden market condition changes. The application demonstrated that asset utilization can be predicted and optimized to maximize ROI to the business.

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	business description & background

Prior to the harvesting season, a manufacturer of fruit-based beverages is interested in making sure that the assets on hand are adequate to support the forecasted harvest and sales demand for their products. The decision support tool also needs to guide buy decisions when additional raw material becomes available at cheaper costs. The following business aspects were relevant to this project:

Within the company, currently there exists no systematic way of generating and analyzing a plan for capital expenditure and profits optimization. Microsoft Excel and MS Project are used to do planning and scheduling. As a result, there is no line-of-sight to the financial impact of decisions made on the ground.

	the challenge

Applied Optimization., was charged with the task of demonstrating a tactical planning application that:

	the solution

To rigorously assess the impact of scheduling on cost, mathematical-programming-based scheduling (as opposed to heuristics) is necessary for this application. The platform selected for developing the application boasts of class-leading GUI capabilities and an ability to interface with a variety of MILP solvers.

The resulting application was test-driven using real data from the previous year's campaign. The user interface was designed to match or improve upon the existing workflow so as to ease the transition to this planning tool. It also offered a convenient method for inputting data and tweaking critical decision-making parameters.

Results were tested using representative raw material forecast data and were found to considerably improve the planning capability compared to the existing, manual planning process.

	the benefits

The company was introduced to the concept of model-based decision-making for the first time. The business team and manufacturing team appreciates the value of such a decision support system. Cycle time in making these decisions with the application is on the order of minutes as opposed to hours by manual means.

	how applied optimization added value

Our clients were extremely pleased with the tactical planning application developed by Applied Optimization. The powerful features of the package were readily apparent and Applied Optimization was able to exploit our experience to our clients' benefit. Some specific features of particular value were:

Applied Optimization's tactical planning application is expected to save several million dollars a year by ensuring on-time usage of perishable raw materials and enabling effective buy decisions when fruit became available at lower prices.

	about the client

Our client is a leading fruit-based beverage manufacturer with a diverse product line. Manufacturing facilities are spread over a number of different locations, while raw materials are purchased from a large number of suppliers internationally.

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