Optimal Production Planning
Strategy for a Global CPG Company
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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 s...
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.
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