Value chain management for commodities: a case study from the chemical industry

We present a planning model for chemical commodities related to an industry case. Commodities are standard chemicals characterized by sales and supply volatility in volume and value. Increasing and volatile prices of crude oil-dependent raw materials require coordination of sales and supply decisions by volume and value throughout the value chain to ensure profitability. Contract and spot demand differentiation with volatile and uncertain spot prices, spot sales quantity flexibility, spot sales price–quantity functions and variable raw material consumption rates in production are problem specifics to be considered. Existing chemical industry planning models are limited to production and distribution decisions to minimize costs or makespan. Demand-oriented models focus on uncertainty in demand quantities not in prices. We develop an integrated model to optimize profit by coordinating sales quantity, price M. Kannegiesser · H.-O. Günther (B) Department of Production Management, Technical University of Berlin, Wilmersdorfer Str. 148, 10585 Berlin, Germany e-mail: [email protected] P. van Beek Management Studies Group and Operations Research and Logistics Group, Wageningen University, Hollandseweg 1, 6706 KN Wageningen, The Netherlands e-mail: [email protected] M. Grunow Department of Manufacturing Engineering and Management, Technical University of Denmark, Building 425, 2800 Kgs. Lyngby, Denmark e-mail: [email protected] C. Habla Department of Enterprise-Wide Software Systems, The Fern Universität in Hagen, Universitätsstr. 1, 58097 Hagen, Germany e-mail: [email protected]