Omya Hustadmarmor optimizes its Supply Chain

Seminar paper from the year 2007 in the subject Business economics - Operations Research grade: 14 Leipzig Graduate School of Management course: Success Stories in Operations Research 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.