The Coca-Cola Company zDevelops products zProduces the advertising and programs to support those products, and zSells syrup concentrate to Coca-Cola Enterprises and other bottlers, etc.
Coca Cola Enterprises zCombines the product concentrate with other ingredients to manufacture and package our beverages. zMarkets and distributes products to retail customers and consumers.
Coca Cola Enterprises zThe largest soft-drink bottler in the world, zThe Coca Cola Company owns 42 % of the outstanding common stock of Coca- Cola Enterprises zNet concentrate/syrup sales to Coca-Cola Enterprises were $3.1 billion in 1998 or approximately 16 % of sales. z3.8 billion unit cases in 1998 zNet operating revenues of $13.4 billion zEBITDA $1.989 billion
Full Service Business zCCE’s vending machine operations yOwns and operates approximately 200,000 vending machines in the US zNorth Metro Atlanta Sales Center yapproximately 2,000 machines yapproximately 8 drivers yarea covering 190 sq. miles
Vending Machines zSupport 4 to 12 flavors zHold 8 to 12 columns of cans z30 cans per column
Our Example z5 Flavors z10 columns zCustomer service -- in-stock probability for all flavors 99%
Issues zWhich flavors do we stock? zHow many columns do we stock for each flavor? zHow often to we restock the machine? zHow do we build driver routes? zHow many drivers and trucks do we need?
Other related questions zCan we make some of these problems go away? zVending machine design ySize yFlexibility yNumber of flavors y…
Current Operations zMachine put on 7, 14, 21, … day schedule based on volume zDrivers assigned routes to cover machines zMissed machines rolled over to next day zDriver allocates columns to flavors and fills zDrive pay partly based on cases loaded zCompany prescribes some flavors yCore flavors and new flavors
Which flavors do we stock? zWhat are the drivers? yRevenue y
Our set up zFlavors we must carry yCoke yDiet Coke ySprite zOther flavors we’ll consider yCaffeine free diet coke yMinute Maid yNestea
What data do we need?
Maximize Revenue zWhat flavors?
A better model? zCustomer profiles yDiet anything yAny variety of Coke y“Healthy” zFraction of all customers fitting profile zChoose flavors that satisfy the greatest fraction of the population
Example
An Optimization Model
How many columns? zWe have chosen flavors zWe know expected sales rates (possibly based on what else is in the machine) zWe stock so that...
The Bottleneck zFirst run out of some flavor as late as possible
How often to restock? zWhat are the issues?
Service Level Poisson CDF: Probability of at most Stock Level arrivals in Restock Interval days
Service Level vs Interval