Development of a decision support tool for supply network planning: A case study from the chemical industry

For the practical use of supply chain management powerful planning tools are needed to support production and logistics decisions at various planning levels. In our paper, we focus on medium-term supply network planning. As a real application, the production of a chemical additive in a multi-site production and distribution network is considered. Supply network planning is an exceedingly complex task which can only be accomplished with the support of computer based systems. Instead of using an off-the-shelf planning tool, the company decided to develop its own linear programming based optimization model. This model allows the consideration of various application features, e.g. the use of alternate production resources or the generation of electrical energy as a side product. The optimization model has proven to be of major value for both strategic and operational decisions. The model is now in full use at three production-distribution networks in different parts of the world.