OPERATIONS MANAGEMENT IN OPERATIONS MANAGEMENT IN THE FRUIT - PowerPoint PPT Presentation

OPERATIONS MANAGEMENT IN OPERATIONS MANAGEMENT IN THE FRUIT INDUSTRY THE FRUIT INDUSTRY J. Alberto Bandoni J. Alberto Bandoni Planta Piloto de Ingeniería Química Planta Piloto de Ingeniería Química Camino La Carrindanga, Km. 7 Camino La Carrindanga, Km. 7 (8000) Bahía Blanca (8000) Bahía Blanca Argentina Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

PRESENTATION OUTLINE PRESENTATION OUTLINE � Introduction � Argentinean Fruit Industry Supply Chain Optimization � Frutas & Jugos ARG Co.: Case Study � Optimal Operation of a Packaging Plant � A Novel Method to Reduce Event Variables in Continuous-time Formulation for Short-term Scheduling 2 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

ARGENTINE IN THE WORLD ARGENTINE IN THE WORLD Iguazú Falls Iguazú Falls Buenos Buenos Aires Aires Neuquén Neuquén Bahía Blanca Bahía Blanca 3 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

Supply Chain Optimization in the Supply Chain Optimization in the Fruit Industry Fruit Industry Noemí Petracci, Guillermo Massini, J. Alberto Bandoni Noemí Petracci, Guillermo Massini, J. Alberto Bandoni FOCAPO 2003, Florida, USA, January 12-15, 2003 FOCAPO 2003, Florida, USA, January 12-15, 2003 Planta Piloto de Ingeniería Química Planta Piloto de Ingeniería Química Camino La Carrindanga, Km. 7 Camino La Carrindanga, Km. 7 (8000) Bahía Blanca (8000) Bahía Blanca Argentina Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

BLACK AND NEUQUEN RIVERS HIGH VALLEY FRUIT INDUSTRY BLACK AND NEUQUEN RIVERS HIGH VALLEY FRUIT INDUSTRY NW NW Region Region Mesopotamian Mesopotamian Cuyo Cuyo Region Region Region Region The High Valley of Rí ío Negro o Negro The High Valley of R Neuquén and Neuquén and and Rí ío Neuqu o Neuqué én, n, and R Black Rivers Black Rivers placed across two states placed across two states High Valley High Valley southwest of the country, is the southwest of the country, is the area of our country where the area of our country where the apples and pears are grown. apples and pears are grown. 5 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

ARGENTINEAN FRUIT INDUSTRY IN FIGURES ARGENTINEAN FRUIT INDUSTRY IN FIGURES Argentinean fruit industry relevant figures • Fruit Industry : 700.000.000 u$s/year export value • Apples and Peers : 350.000.000 u$s (50 %) • HV Region : 330.000.000 u$s (95 %) 23 % for Apples: Apples: industrialization 10.086.000 tns 10.086.000 tns (concentrate juice) 50 % apples for Pears: Pears: industrialization 520.000 tns tns 520.000 (concentrate juice) 6 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

ARGENTINEAN FRUIT INDUSTRY DESCRIPTION ARGENTINEAN FRUIT INDUSTRY DESCRIPTION During the 90’ ’s, companies made important capital investments s, companies made important capital investments During the 90 on new machinery for efficiency improvement. on new machinery for efficiency improvement. In the last few years, due to new worldwide competitors from Asia a In the last few years, due to new worldwide competitors from Asi South West, local economic problems and volatile international South West, local economic problems and volatile international markets, companies are compelled to improve even more their markets, companies are compelled to improve even more their competitiveness to keep on business. competitiveness to keep on business. In this context, they have a need for better decision tools to In this context, they have a need for better decision tools to manage the whole supply chain. manage the whole supply chain. There are a few large companies that operate along the entire fruit uit There are a few large companies that operate along the entire fr supply chain, and concentrate the largest part of the business in the HV n the HV supply chain, and concentrate the largest part of the business i region. region. 7 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

ARGENTINEAN FRUIT INDUSTRY SUPPLY CHAIN ARGENTINEAN FRUIT INDUSTRY SUPPLY CHAIN Third party cold storage H Own B F Packaging Fruit farms markets plant C D A Juice Juice Third party plant markets farms G E N H : Fruit from storage to PP B : Fresh fruit prepared and F : Fresh fruit from own farms to PP packed in different ways. Third party C : Fresh fruit from own farms to JP D : Fruit from PP that do not fulfill packaging quality specification transferred A : Fresh fruit from fruit suppliers to PP. plant to JP G : Fresh fruit from fruit suppliers to JP E : Product streams of Concentrate N : Fruit from supplier’s PP. Juice of 72°Brix and aroma. 8 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

PACKAGING PLANT PACKAGING PLANT H Packaging AFG F D warehouse J K A B Refrigeration AFC chamber : Fruit from storage to PP H : Fruit from PP that do not fulfill quality D : Fresh fruit from own farms to PP F specification transferred to JP : Fresh fruit from fruit suppliers to PP A : Fruit from cold storage to processing line. J AFG : Fruit sent to the processing line. : Fresh fruit prepared and packed in different B AFC : Fruit directly sent to cold storage for later processing. ways. : Fruit to keep in cold storage for later selling. K 9 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

CONCENTRATE JUICE PLANT CONCENTRATE JUICE PLANT D E C L M Fruit Industrial Concentrate reception process juice chamber F G N : Fruit from PP that do not fulfill quality specification transferred to JP . D : Fresh fruit from own farms to JP C : Fresh fruit from fruit suppliers to JP G : Fruit from supplier’s PP. N : Product streams of Concentrate Juice of 72°Brix and aroma. E 10 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

FRUIT SUPPLY CHAIN PLANNING MODEL FRUIT SUPPLY CHAIN PLANNING MODEL Formulated as a midterm tactical planning problem , over , over Formulated as a one- -year time horizon (divided in 12 monthly periods. year time horizon (divided in 12 monthly periods. one Time horizon coincides with the business cycle from harvest Time horizon coincides with the business cycle from harvest to harvest. During this cycle, many decisions have to be to harvest. During this cycle, many decisions have to be made along the SC . made along the SC . Model parameters: cost of each variety of raw material, cost of each variety of raw material, Model parameters: selling prices for each product, fruit production and fruit selling prices for each product, fruit production and fruit variety, distances, packaging and juice plant capacities, variety, distances, packaging and juice plant capacities, demands for each product and market, cooling storage of demands for each product and market, cooling storage of fresh fruit and final products, etc. fresh fruit and final products, etc. 11 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina

MTHEMATICAL MODEL: MILP MTHEMATICAL MODEL: MILP Model description: Objective Function : max. of benefit along one-year operation. Model equations : mass balance and production equations at farms, packaging plants and juice plants : production limits at proprietary farms, bounds Constraints on fruit supply, bounds on internal processing capacities, demand satisfaction, stock limits at cold storage and storage at juice plants Model statistics: 14335 continuous variables and 3372 binary variables, 4421 equality and 7524 inequality constraints. Implementation environment: The GAMS (Brooke et al., 1998) was used in order to implement the MILP optimization model and generate their solutions. 12 PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina PASI Program on Process System Engineering, August 16-25, 2005, Iguazú Falls, Argentina