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Value chain management for commodities: A case study from the chemical industry

In: Supply Chain Planning

Author

Listed:
  • M. Kannegiesser

    (Technical University of Berlin)

  • H.-O. Günther

    (Technical University of Berlin)

  • P. van Beek

    (Wageningen University)

  • M. Grunow

    (Technical University of Denmark)

  • C. Habla

    (The Fern Universität in Hagen)

Abstract

We present a planning model for chemical commodities related to an industry case. Commodities are standard chemicals characterized by sales and supply volatility in volume and value. Increasing and volatile prices of crude oil-dependent raw materials require coordination of sales and supply decisions by volume and value throughout the value chain to ensure profitability. Contract and spot demand differentiation with volatile and uncertain spot prices, spot sales quantity flexibility, spot sales priceȁ3quantity functions and variable raw material consumption rates in production are problem specifics to be considered. Existing chemical industry planning models are limited to production and distribution decisions to minimize costs or makespan. Demand-oriented models focus on uncertainty in demand quantities not in prices.We develop an integrated model to optimize profit by coordinating sales quantity, price and supply decisions throughout the value chain. A two-phase optimization approach supports robust planning ensuring minimum profitability even in case of worst-case spot sales price scenarios. Model evaluations with industry case data demonstrate the impact of elasticities, variable raw material consumption rates and price uncertainties on planned profit and volumes.

Suggested Citation

  • M. Kannegiesser & H.-O. Günther & P. van Beek & M. Grunow & C. Habla, 2009. "Value chain management for commodities: A case study from the chemical industry," Springer Books, in: Herbert Meyr & Hans-Otto Günther (ed.), Supply Chain Planning, pages 283-313, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-93775-3_11
    DOI: 10.1007/978-3-540-93775-3_11
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    Citations

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    Cited by:

    1. Yu, Song-min & Fan, Ying & Zhu, Lei & Eichhammer, Wolfgang, 2020. "Modeling the emission trading scheme from an agent-based perspective: System dynamics emerging from firms’ coordination among abatement options," European Journal of Operational Research, Elsevier, vol. 286(3), pages 1113-1128.
    2. G J Hahn & H Kuhn, 2011. "Optimising a value-based performance indicator in mid-term sales and operations planning," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(3), pages 515-525, March.
    3. Badri, Hossein & Fatemi Ghomi, S.M.T. & Hejazi, Taha-Hossein, 2017. "A two-stage stochastic programming approach for value-based closed-loop supply chain network design," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 105(C), pages 1-17.

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