The encyclopedia · Engineering & Operations · Operational decision · 1985
Trumbull Asphalt used one integer program to blend, source and site plants, saving $1M.
The world's largest industrial asphalt producer used one integer-programming model for sourcing, blending, distribution and plant siting, saving $1M a year.
Trumbull Asphalt
the move
Trumbull Asphalt, the world's largest producer of industrial asphalt products, had to decide where to buy raw materials, how to blend them, where to put plants and how to ship the finished product.
Each of those choices was traditionally made separately, so a good blend could conflict with a bad plant location or an expensive raw-material source.
Trumbull built a single integer-programming model for business planning that handled sourcing, distribution, blending and facility configuration together, maximising annual margin.
Guided by the model, the company saved more than $1,000,000 a year.
why it works
- Material, blend and plant decisions are coupled, so one model beats silos
- Integer programming handles the discrete plant and sourcing decisions
- A yearly margin objective made the answer directly actionable
- The savings came from coordinated choices, not from cutting anything in half
what transfers
When a business's decisions interlock, one integrated model beats separate siloed ones — the blends and the plant locations are really the same decision.
what came after
The integer-programming model guided sourcing, blending and facility configuration, saving Trumbull Asphalt more than $1,000,000 a year. The 1985 Interfaces paper became a compact, durable example of integrated business planning and won an Edelman-style audience.
references
- Optimization Modeling for Business Planning at Trumbull Asphalt
- Optimization Modeling for Business Planning at Trumbull Asphalt
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