Trading off inventory, capacity and customer service in semi-process industries: a case study at SEPPIC

Abstract

This article presents a straightforward production/inventory model that can capture the trade-offs among average inventory, production capacity and customer service levels in a semi-process industry setting. The model is based on well-known approximations from queuing literature, and it supports midterm planning procedures at SEPPIC, a large specialty chemicals company. Different features are specific to a semi-process setting, such as differences in reactor yield, variations in quality requirements across products, the need for cleaning reactors when switching between product types, and the requirement to produce products in campaign sizes that are integer multiples of the reactor's batch size. This article discusses how SEPPIC's operational reality is reflected in the model and illustrates the resulting insights with real-life data from two SEPPIC product families.