Buffer Location and Sizing to Optimize Cost and Quality

We consider the problem of optimizing the location and size of buffers in semi-continuous manufacturing processes. This problem is formulated as a non-linear integer program that determines the optimal buffer size for individual stages and allocates tanks to those stages in order to minimize total tank inclusion, holding, quality, process overshoot and undershoot costs. We develop heuristics to solve the problem and derive bounds to evaluate the quality of the heuristics. This method is implemented at three glucose and three sorbitol production processes at a leading food-processing company. This has resulted in total annual cost savings of around 6.4% or $9 million. In addition, this work has had a significant impact on several strategic operational decisions at this company. 1 For confidentiality reasons, the name of this company has not been revealed. However, verification of this work has been provided by this company to the Editor-in-Chief.