Unpublished paper.

S F Bush with E P B Jongen.

Summary

The paper describes the analysis and computation carried out to model a manufacturing and marketing complex spread over several countries. Without loss of generality the model has been specifically applied to a polymeric materials business encompassing chemical and prepolymer precursors.

The model has been designed to have a variable structure so that changes to the nature and shape of the complex can be read in as data in the same way that parameters such as costs and efficiencies usually are. Because of this facility, the model provides a ready tool not only for optimisation, but also for assessing the strategic effects of possible future conversion technologies and for setting technological targets in the light of likely movements in resources and labour costs, costs of capital, changes in exchange rates and end-use demand.

The model has been designed to support both the planning and budgeting functions. While advantageous in itself, this dual objective was also necessitated by the practical circumstances in which the model was constructed, namely the large quantitities of data which have to be assembled and reconciled if the results from the model are to carry conviction. Accordingly the model output can provide reports on material flows, grade costs, and annual budgets for all or any part of the complex.

An example of the results obtained from optimisation of the full complex (with product details suppressed) is given and compared with the results from the standard sub-optimisation procedures in force. A number of the problems inherent in such procedures – transfer and coproduct pricing, overhead and capital allocation – are highlighted to show where conventional procedures can lead significantly away from global optimisation.

See also the section on Mathematics & Computation.