5  Operations Research Assignment

5.1 Business Case Summary:

Optimizing Snack Shipping at Mondelēz Turkey Business Challenge:

Mondelēz Turkey, a leading snack producer, faced the challenge of efficiently shipping its products from its production facility in Gebze to various cities in Turkey. The goal was to develop a shipment plan that maximized efficiency by utilizing the fewest vehicles at the lowest cost. Manual assignment of shipments to vehicles and routes proved to be time-consuming and lacked the guarantee of an optimal solution, especially with a growing list of shipments and complex constraints. Please find the details here.

5.2 Problem Description:

The challenge involved factoring in variables such as capacity, lead time, delivery time, route and vehicle availability, and product-based constraints. With predefined routes and orders sent in full- and partial-truckloads, the number of potential shipping combinations quickly reached the millions. Mondelēz sought a solution provider who could deliver optimal results within reasonable time limits.

5.3 Solution Approach:

Arute Solutions, a routing optimization provider in Istanbul, employed machine learning and operations research to address Mondelēz’s supply chain optimization needs. Arute Solutions developed a Mixed Integer Programming (MIP) model to solve the daily shipping assignment problem. The transition to Gurobi optimization solver significantly improved solution quality and reduced solving time, creating optimal or near-optimal solutions quickly.

5.4 Benefits:

Efficiency and Cost-Effectiveness: Mondelēz now has an automated tool, powered by Gurobi, that calculates shipping schedules much faster than manual methods, ensuring the most efficient and cost-effective option.

Performance Improvement: Gurobi runs the model up to 92% faster than the previous commercial solver, providing a substantial advantage and performance improvement.

Solution Quality: Gurobi improves solution quality by an average of 7% compared to the previous solver. This includes enhancements in vehicle assignments, vehicle utilization, and total costs.

Future Application: Arute Solutions plans to use Gurobi for all future routing and assignment projects and customers, indicating a high level of confidence in the solution’s effectiveness.

In summary, the implementation of Gurobi-powered optimization at Mondelēz Turkey has streamlined and significantly improved the efficiency of their shipping operations, ensuring faster, more cost-effective, and higher-quality solutions.