Bethlehem Steel combines cutting stock and set covering to enhance customer service

Some Bethlehem Steel customers order master coils of sheet steel which are slit into a number of narrower and smaller coils to fit specific manufacturing needs. To serve these customers, Bethlehem has developed a computer-based mathematical model that generates, based on customer requirements, optimum coil widths and slitting patterns. This model consits of two main programs. First, a set covering approach is used to minimize the number of distinct thicknesses that must be considered-each thickness defines a cutting stock problem. Then, based on input parameters specified by the user, a cutting stock algorithm is used that balances the following customer objectives: (1) minimize number of slitter setups, (2) maximize material utilization, (3) generate minimum excess inventory (4) generate minimum shortfall against forecasted demand, and (5) meet all equipment limitations. The program also generates coil widths that optimally utilize Bethlehem’s facilities. Examples are given to illustrate the utility of the model.