Analysis of a complex multi-product material flow system of a large chemical manufacturer

We analyze the complex multi-product material flow system of a large chemical manufacturer that involves multiple production plants and warehouses. The use of third-party offsite warehouses adds to the complexity of the material flow system. We develop decision support tools to aid the analysis of the integrated material flow system and identify opportunities to improve the logistics operations. In particular, we develop indices to identify fast and slow moving items and verify their accuracy by comparison to the solution of a simple inventory allocation model. These indices are then used to optimize the capacity utilization of the onsite warehouses. Our analysis results in several alternative material flow and material allocation strategies resulting in significant estimated annual cost savings (including transportation, material handling and offsite warehouse rental costs).