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A glass bottle allocation model for Heineken

Beckers, Chris H.J. (2009) A glass bottle allocation model for Heineken.

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Abstract:This research aims to improve the allocation of the beer bottle demand of Heineken to its suppliers. To this end, we have developed a goal programming model that is capable of optimizing the allocation on both costs and security of supply. The advantage of a goal programming model for Heineken is that it does not only provide efficient solutions, but also indicates the best possible solutions on all objectives. This way, Heineken improves its insight on the quality of the chosen allocation. For Heineken, three aspects of the supply are very important: costs, quality, and security. The quality of the bottles and the production process is guarded by regulations and audits. In general, this leads to a high reliability of the suppliers. The production process, however, is complex and occasional disruptions are inevitable. These disruptions can have a serious impact on the delivery of bottles and, therefore, security of supply and costs are considered the most important objectives during the allocation. Several reasons exist for the high impact of disruptions. The costs of overcapacity at glass factories are very high, due to the high fixed costs. Suppliers therefore tend to minimize free capacity. The production speed is limited by the maximum temperature of the furnace, leaving limited possibilities to increase the capacity. Moulds, used in the production of beer bottles, are machine specific and have a lead‐time of approximately three months. Therefore, no quick alternatives can become available at other factories in case of a disruption either. Measures must already have been built‐in in the allocation, in order to secure enough supply at times of disruptions. According to the literature, security of supply is mainly provided by redundancy. Additional suppliers, additional production capacity, and stock can be used to mitigate disruptions. Allocation problems in the literature are often solved by mathematical programming. Based on the number of objectives for Heineken (minimizing costs and maximizing security of supply), different types of programming models can provide solutions. Goal‐programming requires the decision maker to explicitly state the goal values. A comparison of the allocation’s cost and security of supply values with these goal values increases the visibility of the quality of the allocation solution. The goal programming model finds a balance between security of supply and costs based on the preference weights of the decision maker.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
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