Class Introduce
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Transcript of Class Introduce
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8/12/2019 Class Introduce
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Anadolu Efes Case
Optimization of Location,Distribution and Capacity Expansion
Decisions
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Company Background
Anadolu Efes Leading beer producer and distributor in Turkey
Emerging international presence in EasternEurope and Central Asia
operates 9 breweriesand 4 malteriesin 5countries
annual beer production capacity: 1.4 billionliters
sells its products in over 30 countries
domestic market - 77% of total sales volume
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Organization
Anadolu Holding
Anadolu Efes
(Beverage Group)Production Group:
Brewery and Malteries
International Operations:Efes Breweries International
Soft Drinks:
Coca-Cola
Sales and Distribution:Efes Marketing
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Efes Domestic Beer Market Share
In 2000, Efes share in the Turkish beer marketreached a record high of 78%
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700
1986
1988
1990
1992
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1998
2000
50
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Sales Volume (million
liters)
Market Share (%)
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Domestic Beer Market
Potential for market growth
Per capita beer consumption in Turkey increasedby more than 50% from 1995 to 2000
Annual population growth of 1-2% over the yearsincreases the adult population each year
Market Size
730 million liters sales and around $294 million
sales value in 2001
Turkey ranks as the tenth largest beer-consumingnation in Europe
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Beer Trivia
Who drinks the most beer?Annual Beer Consumption
1. USA 23.00 billion liters
2. China 20.73
3. Germany 10.46
4. Brazil 7.88
5. Japan 7.15
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Beer Trivia
Who drinks the most beer?Per Capita Beer Consumption
Czech Republichas the largest per capitabeer consumption in the world: 156 liters
Global average is around 25 liters
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Global Beer Market
Market Size World beer consumption was around 126 billion
liters in 2000
USA and China account for 36% of the global
beer market; emerging markets make up 45%
Growth Opportunities
Consumption in emerging markets has beengrowing
Major US and Europe based brewers have been
focusing on Eastern Europe, China and the CIS
countries
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Efes Strategic Goals
Business diversification and internationalpresence
Maintain domestic market share
Concerns:1. Increasing competition due to new entries into
the domestic beer market
2. Anticipated increases in beer demand that will
surpass the available beer production capacity
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Plans
1. Optimize malt and beer distribution networkto provide leverage against increasing
competition
2. Open new breweries and possibly expand the
capacity over the next several years to supply
for increased demand
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Analysis
1. Improve the current distr ibution system
Analyze Efesdistribution strategy anddevelop a malt and beer shipment plan thatminimizes total transportation costs
2. Determine when and where Efes should build
new breweries and possibly expand their
capacities
Optimize distribution, location, and capacityexpansion decisions over the next three years.
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Beer Trivia
a) 1,000 years
b) 2,000 yearsc) 7,000 years
d) 20,000 years
How long have we been drinking beer?
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How long have we been drinking beer?
The earliest recorded beerrecipe was found in claytablets written 7,000 yearsago.
Beer originated inMesopotamia and thenfound its way to Anatolia.
Four thousand years ago
in Anatolia, Hittites, weredrinking beer in daily lifeas well as in sacred rituals.
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Beer Production
Barley Malt
Hops
+
+ H2O + yeast =
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Beer Production Process
malting barley
distilling
brewing
bottling
Mashing
Boiling
Fermentation
Aging
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Production and Distribution System
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Afyon
Konya
Import
Istanbul
Ankara
Istanbul
Izmir
Antalya
Bursa
Kayseri
Export
Distribution System - CurrentMalt
Supply / Capacity
24 / 30
2 / 68
20 / 20
BeerDemand
103
74
50
60
102
13
202/ 220
200 / 200
BrewerySupply / Capacity
0
0
50
0
0
0
0
60
102
13
24
Current
Malt Transportation
Current
Beer Transportation
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Current Distribution System
The current shipment plan enforces certainrestrictions due to established relations between
brewery-distributor pairs:
Ankarabrewery supplies all the beer demandof Bursadistributor
Istanbulbrewery supplies all the beer demand
of Antalyadistributor
Total shipment costs can be reduced by optimizing
the shipment plan
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Analysis
Optimize the distribution system by formulatingand solving a linear programming model,
1) with existing relationship limitations,
2) by relaxing these limitations,and summarize the resulting savings in costs.
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Analysis - continued
Discuss the sensitivity of the model solution tochanges in model parameters
For example:
1) analyze how much reduction intransportation costs would justify keepingthe existing brewery-distributor relations.
2) discuss other input parameter changes thatwould make certain shipment choices in thecurrent distribution plan, i.e. malt import,cost-effective.
3) discuss sensitivity to demand changes
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Analysis Optimize
new brewery location and capacity expansion
decisions
malt and beer distribution decisions over the next
three years
Objective:
Minimize the present value of the malt and beer
transportation costs over a 20-year horizon and the present value of the capacity expansion costs
such that all of the beer demand at the distribution
centers is satisfied in each year.