The encyclopedia · Strategy & Leadership · Strategic decision · 2000–2010
Sasol built its coal-to-liquid plans on variability, adding $230M
Sasol's MOSS stochastic simulation captured production variability that averages hide, adding over $230M of value in a decade.
Sasol
the move
Sasol's coal-to-liquids plant varies over time, but standard average-based planning smoothed that away, so business cases rested on one number.
The value-chain optimization team built MOSS, a stochastic simulation that reflects production variability across time.
These distributions became the basis for business cases on gas and liquid facility changes, and for surfacing risk in strategic decisions.
why it works
- Stochastic simulation reflects real variability that averages hide.
- It supports business cases for big facility changes.
- It highlights risk, not just a point estimate.
- It was a finalist for the 2010 Franz Edelman Award.
what transfers
When a plant's output swings, plan on the distribution; a single average number quietly misprices the riskiest and most valuable options.
what came after
MOSS provided an estimated value addition for Sasol of over $230 million since 2000, a figure considered conservative by the team. The models became an integral part of Sasol's strategic decision-support process and were seen as a step forward for OR in chemical engineering.
references
- Sasol's innovative use of simulation models declared Edelman finalist
- Introduction: 2010 Franz Edelman Award for Achievement in Operations Research and the Management Sciences
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