Strategic and operational management with optimization at Tata Steel

Strategic and operational management with optimization at Tata Steel

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Article ID: iaor19951418
Country: United States
Volume: 25
Issue: 1
Start Page Number: 6
End Page Number: 19
Publication Date: Jan 1995
Journal: Interfaces
Authors: , , , , , ,
Keywords: programming: integer
Abstract:

Tata Steel has been striving to optimize its operations amidst scarce resources and capacity imbalances. To provide decision support, the authors developed a mathematical model based on mixed-integer linear-programming and hierarchical optimization between 1983 and 1986. It considers marketing constraints, capacities, yields profitability, routes, energy, and oxygen balances. Its use just for optimal distribution of power has provided a benefit of U.S. $73 million in the first year of implementation (1986-1987). Tata Steel has realized other benefits, such as optimal distribution of scarce oxygen and liquid iron, optimal power cogeneration levels, break-even prices and quantities of purchased scrap, and optimal conversion of semifinished steel into finished products by other companies functioning as conversion agents. In the early ’80s, the model shifted Tata Steel’s emphasis from maximizing tonnage to maximizing contribution to profits.

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