Annual Distribution Budget in the Beverage Industry: A Case Study

Luis Guimarães (), Pedro Amorim (), Fabrício Sperandio (), Fabío Moreira () and Bernardo Almada-Lobo ()
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Luis Guimarães: INESC TEC, Faculdade de Engenharia, Universidade do Porto, 4200-465 Porto, Portugal
Pedro Amorim: INESC TEC, Faculdade de Engenharia, Universidade do Porto, 4200-465 Porto, Portugal
Fabrício Sperandio: INESC TEC, Faculdade de Engenharia, Universidade do Porto, 4200-465 Porto, Portugal
Fabío Moreira: INESC TEC, Faculdade de Engenharia, Universidade do Porto, 4200-465 Porto, Portugal
Bernardo Almada-Lobo: INESC TEC, Faculdade de Engenharia, Universidade do Porto, 4200-465 Porto, Portugal

Interfaces, 2014, vol. 44, issue 6, 605-626

Abstract: Unicer, a major Portuguese beverage company, improved its tactical distribution planning decisions and study alternative scenarios for its supply strategies and network configuration as result of an operations research (OR)-driven process. In this paper, we present the decision support system responsible for this new methodology. At the core of this system is a mathematical programming-based heuristic that includes decision variables that address transportation and inventory management problems. Unicer runs a set of production and distribution platforms with various characteristics to fulfill customers demand. The main challenge of our work was to develop a tactical distribution plan, which Unicer calls an annual distribution budget, as realistically as possible without jeopardizing the nature of the strategic and tactical tool. The company had a complex tactical distribution planning problem because of the increasing variety of its stock-keeping units and its need for a flexible distribution network to satisfy its customers, who demand a very fragmented set of products. Atypical flows of finished products from Unicer's distribution centers to its production platforms are a major cause of this complexity, which yields an intricate supply chain. The quality of the solutions we provided and the implementation of a user-friendly interface and editable inputs and outputs for our decision support system motivated company practitioners to use it. Unicer saves approximately two million euros annually and provides better information to its decision makers. As a result, these decision makers now view their operations from a more OR-based perspective.

Keywords: tactical distribution planning; mixed-integer programming; decision support system; beverage industry; supply chain management (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orinte:v:44:y:2014:i:6:p:605-626

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