Production Optimization
Case 2: Demand And Supply Planning - Juice Production Optimization
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Client Situation
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The main problem for the client was the customer service
level. Product assortment had increased dramatically and this led
to problems in delivery reliability. First the client tried to
improve this reliability by increasing inventory. As a result,
costs increased but service level rather dropped than
improved.
Client initiated a project the objective of which was to
find ways to improve customer service level and cost
efficiency.
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PlaNet's role in the project
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Client's supply process was modeled using cost-based
production planning and optimization tool:
- Rules for production batch sizes were defined to improve
responsiveness to market changes
- Safety stock levels were defined to meet the set objectives
for customer service
- Production sequence for products was defined
- Batch size for inventory replenishment was determined
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Solution and client benefits
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- Inventory level was decreased by 40%, from 7,5 days of stock
to 4 days
- As inventory dropped, service level increased by 4%
- Smaller batch sizes enabled much faster response to market
changes
- Product dumping decreased
- Operational costs in production decreased by 15%
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