Optimal Production Planning

Companies in the Consumer-Packaged Goods Industry are faced with a chronic dilemma: efficiency vs. agility. Companies must balance scale which creates cost-saving opportunities and flexibility which often incurs incremental costs. Following extensive cost structure analysis and mapping of the company’s supply chain network a comprehensive Mixed Integer Linear Programming model was created. The model’s objective function is cost minimization which it must attempt considering “current-state” inputs and multiple operational constraints. The results suggest that a hybrid production planning strategy between “level-production” and “demand-chase” is preferred and can generate significant cost savings. In summary this strategy can help companies enhance their efficiency and reduce costs when optimizing the total end-to-end supply chain instead of using department-based budget management.