Case Study on Operations Research

Optimization of product sizes to achieve high productivity in Tata Tinplate PackagingJamshedpur

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Contents 1. 2. 3. 4. 5.
Profile of the organization Linear Programming Data Collection 8 Problem Formulation 10 Problem solving using Tora

Pages
- 3 to 5 -6 - 6 to - 9 to - 11 to 17

Page 2 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Profile of the organization

BACKGROUND
Company History
The company was incorporated in 1920 and the site chosen was Golmuri, Jamshedpur. The first steel plate of Tinplate gauge was rolled on 18th Dec 1922 at the Hot Dip Plant (HDP) producing Hot Dip Tinplate, from tin bars supplied by Tata Steel and this continued till 1979 albeit with capacity enhancements. For 50 years, TCIL thus almost singlehandedly built up the Indian Tinplate Industry. To keep pace with technological developments, TCIL was the first to set up a combination line capable of producing both Electrolytic Tinplate (ETP) and Tin Free Steel (TFS). This plant, the first of its kind in India, was commissioned in 1978 and commenced production in January 1979. In 1982, Tata Steel bought the shareholding of Burmah Oil, the then major shareholder and took over the management of the company. In 1991-92, TCIL undertook backward integration to setup a Cold Rolling Mill (CRM) for production of TMBP Coils based on Hot Rolled Coil supplies from Tata Steel which was also setting up its Hot Strip Mill (HSM) at the same time. The CRM was thus a strategic fit for TCIL with Tata Steel. The Cold Rolling Mill (CRM) was commissioned in 1996-97 but with heavy time and cost over-runs, the company started incurring severe losses. A turnaround strategy was developed with the objective of ensuring Revival and Setting Fundamentals Right, and implemented during the financial years of 1997-2001. The basic elements of this strategy were:

Operational Improvements Financial Restructuring Hot Dip Plant(HDP) phase out and downsizing

Since April 1998, TCIL operates under a conversion arrangement with Tata Steel for its business. Today, TCIL is the only indigenous manufacturer of value-added Tinplate and TFS for processed food, battery, dairy product, and beverage and soft drink crown caps in both single reduced and double reduced forms. The establishment of the Solution Centre in December 2005 should provide further impetus to its business purpose of being a costeffective metal packaging solutiom provider with focus on innovation and consumer convenience. The solution centre will facilitate the process of building solutions for end-use customers i.e. fillers/food processors, complement the efforts of can fabricators across the country and develop R&D capabilities .TCIL with its continuing yen for quality, productivity, costeffectiveness and customer service, looks forward to the future with confidence.

Page 3 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

PRODUCT RANGE-ELECTROLYTIC TINPLATE (ETP) LINE

Electrolytic Tinplate undoubtedly enjoys the pride of place as a packaging medium especially for food. It owes its unique position to its "nine layer sandwich structure", each of which contributes to its eminence as a packing material. The steel base provides the necessary strength and formability for can fabrication. The tin-iron alloy layer provides the bond between the steel and free tin layer. The free tin layer is not only responsible for the attractive bright finish and ease of solderability but is also non-toxic- a factor of vital importance in food packaging! Single Reduced Tinplates Open Top Sanitary Cans (Otsc) Tin Free Steel Double Reduced Tinplate Sheets

ORDER PROCESS AT TINPLATE :

(A)Order Receiving: Customers order comes to COMD from marketing office Kolkata in Excel sheet having following detail 1) Received dt : This is the date of receiving of order by Kolkata Marketing 2) Indent no : It is running number for the a particular month 3) Customer : 4) Business : It indicates that order is from Domestic or Export 5) Product : It is broadly about product like ETP, TFS, Lacquered , printed 6) Segment : Order are categorized in NOC ,OC, OTSC, NOC-DR08, NOC-DR48, TFS SR, TFS DR 7) Sub segment : Sub segment is required in mainly NOC segment like 16.8, NOC19-22, NOC-23-25, NOC-26-28 and NOC> 0.28

Page 4 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL 8) Body / Component : It indicates about the order spec is for body or component of can 9) Can size 10)Can use : It indicates about the end use of can 11)Zone : Order pertaining to the zone i.e North/ East / West /South 12)Yard: It indicates about the about the material to be dispatched in Yard like Tarapur ,Murthal , Baroda etc or Direct to customer i.e direct sale from Jamshedpur 13)Order spec : Thickness, Width, Cut-length, Temper, Coating, finish , quality is given in each column, 14)Order qty : 15)Dispatch , ready and Balance column are there which is updated by COMD 16) Gross production : for planning purpose it is order qty / 0.95 for OC and order qty/ 0.90 for other product These order are entered in Baan ERP system for dispatch after getting price approval (A) Thickness Selection :

Order Type SR order

Order thickness 0.18- 0.23 mm 0.24 0.25 mm 0.26 0.27 mm 0.28 mm and above 0.17 0.20 mm 0.21 0.22 mm 0.23 0.24 mm 0.14 - 0.16 mm 0.17 - 0.18 mm 0.19 0.21 mm

HR coil Thickness 1.8 mm 2.0 mm 2.2 mm 2.6 mm 1.8 2.0 2.2 1.8 2.0 2.2 mm mm mm mm mm mm

DR 0rder DR480

DR 550

For order type SR and Thick 0.26 mm , 2.0 thickness of HRC has to be selected if Grade is TMBP 2 (B) Grade Selection: Order Temper T57

Product/ End use OC NOC (General) NOC( Paint)

HR Coil Grade GRD/GR1/WTCR/ GRD GRD/GR1

Page 5 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Page 6 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Study in Linear Programming

This study describes the actual facts of The Tinplate Co. related to optimisation of productivity. A solution has been advised using the principles of Linear Programming.

This case study is Optimization of product sizes to achieve high productivity in Tata Tinplate Packaging of TATATINPLATE COMPANY, Jamshedpur using various size ( Thickness, width & length ). A number of sizes were identified to maximize productivity problems.

The problem in question is to identify the campaign sizes which need to produce. The overall set of parameters that govern this decision are Selection of the campaign size of large volume orders. the maximum time needed for Mill availability to produce tinplate. the minimum number of customers required to make that size profitable. the additional cost incurred at each setup for the sizes changed in the mill. the potential number of customers lot order at particular size. DATA COLLECTION TABLE Yard/Direct Baroda Chennai Customer Kaira olympic Janki Hassani Food Customer ITI ITI PMP ITI Soonthorn Diamond Line ITI Hassani Food ITI ITI Hassani Food Arafat Thick 0.20 0.20 0.22 0.24 Thick 0.15 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.17 0.17 0.18 Width 857 868 900 890 Width 897 787 800 832 841 850 850 880 890 855 865 820 Length 833 710 810 975 Length 708 630 924 708 926 850 920 926 700 851 862 680 Temper T61 T55 T55 T61 Temper DR08 DR08 DR08 DR08 DR08 DR08 DR08 DR08 DR08 DR08 DR08 T57 Coating 5.6 5.6 5.6 5.6 Coating 5.6 5.6 5.6 5.6 11.2 5.6 5.6 5.6 5.6 5.6 5.6 5.6 Finish B B B T Finish B B T B T B B T B B T B Quality A A U A Quality A A A A A A A A A A A U Total 11 6 10 11 Total 50 50 300 50 650 50 50 100 50 50 100 76

Yard/Direct Banglore Banglore Banglore

Banglore

Banglore Banglore

Tarapore

Page 7 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Baroda Gaziabad/ Jammu

Kaira Berger Arabian Can Reptakos Arabian Can STW HTW Mirra PETROX Soonthorn I.T.I Taiwan Summit Mirra Deccan HTW Taiwan Summit Raj Shree Strategic Jenson & Nickelson Berger Emitates metalic Taiwan Summit Taiwan Summit Soonthorn Tianjin

0.18 0.18 0.19 0.19 0.19 0.19 0.20 0.20 0.20 0.20 0.20 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.22 0.22 0.22 0.23 0.23 0.23 0.23 0.23

824 830 803 833 850 890 820 820 824 839 875 790 800 805 840 842 880 895 785 785 810 740 794 830 864 874

630 680 860 833 929 880 670 680 1015 795 675 795 804 560 708 929 884 660 544 575 562 975 670 1032 945 972

DR08 DR48 T61 T57 T61 T57 DR48 T57 T61/T57 T61 T61 T61/T57 T57 T57 T61 T61 T57 DR08 T57 T57 DR48 T57 T57 T57 T61 T61

5.6 5.6 5.6 5.6 5.6 16.8 5.6 5.6 5.6 11.2/5.6 5.6 5.6 5.6 5.6 8.4/5.6 11.2/5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 11.2/5.6 5.6/2.8

B B T B T B B B B T B B T B T T T B B B B B T T T T

A U A A A A U U U A A U A U A A A A A A U A A A A A

91 91 82 98 95 50 56 178 70 100 52 104 50 52 52 56 50 158 50 50 52 167 50 150 100 225

Tarapore Hissar Hyderabad

Banglore

Hyderabad Tarapur Hissar

Banglore 25/8 Gaziabad/ Jammu

Page 8 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL 1.1.1 Information about each Campaign The following table details more information about each campaign. An arbitrary campaign code has assigned for each coil campaign size. The number of coils processing for the campaign at a particular setup time will give final one campaign size. The setup times are realistic. The setup time vary according to the number of coils processed in the campaign. Per Unit(MT) Rate of the coil in multiple of 10 thousand INR 5 5 6 5 6 7 7 8 7 6 6 7 7 7 7 7 8 7 6 6 5 7

Coil code CS1 CS2 CS3 CS4 CS5 CS6 CS7 CS8 CS9 CS10 CS11 CS12 CS13 CS14 CS15 CS16 CS17 CS18 CS19 CS20 CS21 CS22

Coil Campaign sizes 144 192 68 136 85 24 36 14 23 72 54 12 25 33 88 56 9 13 48 42 102 39 Totals

No. of Potential Customers 12 6 6 6 1 5 6 6 4 8 12 3 11 2 8 6 2 5 8 1 3 5 126

Setup time (mins) 1.5 1.5 2 1.5 1.5 2 2 2 2 1.5 2 2 2 2 1.5 2 2 2 2 2 1.5 2 40.5

Mill availability time 32 30 28 30 30 21 22 20 22 28 24 20 20 22 24 25 18 20 24 22 38 22

From the above table if we produce all the campaign sizes then the total setup time per month is 126 x 40.5 /60 = 85 hrs. The total availability time per month 744 85 = 659hrs. Constraint A: We would like to cut down the setup time by 22 hrs per month. This means the setup time should not be more than 63 hrs per month. The least money that could be made assuming that all of the 126 customers buy the smallest coil size [9 MT] would be 126 * 9 * tonnage price in thousand rupees [8] = 9072000 INR. The highest money that could be made would be that all of the 126 customers buy the largest coil size [192 MT] would be 126 * 192 * tonnage price in thousand rupees [5] = 120960000 INR.

Page 9 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL Constraint B: TATATINPLATE COMPANY figured out that a minimum revenue of 65000000 INR would be required to have a net positive operating profit. 1.1.2 Identification of coil size groups. The below table lists discrete coil size that can be grouped. A coil size group is a collection of coil sizes that serve the near by sizes. The coil sizes are identified by their respective size codes. coil size groups that can serve the near by sizes CS12, CS17 CS8, CS18 CS6, CS9, CS13 CS7, CS14, CS20, CS22 CS11, CS16, CS19 CS3, CS10 CS15, CS21 CS4 CS1 CS5 CS2 Constraint C: It is important that at least one discrete size among a coil size group must have to be rollout so that its nearby sizes are to be delivered. 1.2 Problem Formulation

Our objective is to identify the minimal number of discrete coil sizes required such that the constraints described in Section 1.1.1 are valid. Since we would eventually determine whether a coil size has to be rollout/ not to be rollout, this problem falls into the domain of Linear Integer Programming. NOTE: This problem can also fall into the domain of multi-objective decision making. In that case the constraints A, B, C would be objectives themselves. However this has not been pursued as of now. The domain variables are the respective campaign size identified by the coil size codes CS1 to CS22. The variable for the coil size codes I is identified by CSi. CSi = 0 implies that coil size with code I is not to be roll out. CSi = 1 implies that coil size with code I is to be roll out. The objective function is Minimize Z = CSi where I from 1 to 22 Therefore CS1 + CS2 + +CS22 has to be minimized. This objective function is to be met subjective to the following constraints.

Page 10 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL Constraint A: Setup time The overall setup time as described before should be less than 63 hrs per month. Therefore in a set of one complete cycle of all the sizes setup time should not increase more than 63*60/126 =30 min CSi * Ti <= 30 min. Ti is the setup time for the respective coil size CSi. Therefore 1.5*CS1 + 1.5*CS2 + . +2*CS22 <= 30 min. OR, 3*CS1 + 3*CS2 + . + 4*CS22 <= 60 min.

Constraint B: Revenue The least money that could be made assuming that all of the 126 customers buy the smallest coil size [9 MT] would be 126 * 9 * tonnage price in thousand rupees [8] = 9072000 INR. The highest money that could be made would be that all of the 126 customers buy the largest coil size [192 MT] would be 126 * 192 * tonnage price in thousand rupees [5] = 120960000 INR. TATATINPLATE COMPANY figured out that a minimum revenue of 65000000 INR would be required to have a net positive operating profit. CSi * PCi * Pi >= 65000000 INR. Where CSi is respective I th coil size. PCi is the number of potential customers for I th coil size and. Pi is the MT (Metric Tonne) price in thousand of the I th coil size. Where I is from 1 to 22. Therefore 144* 12*5000*CS1 + .. +39* 5*7000*CS22 >= 65000000 INR. OR, OR, 144* 12*5*CS1 + .. +39* 5*7*CS22 >= 65000 INR. 8640*CS1 + .. + 1365*CS22 >= 65000 INR

Constraint C: coil size groups Atleast one discrete coil size of a coil size group must be rollout so that nearby coil sizes can be served. So the constraint functions would then be CS12 + CS17 >= 1, CS8 + CS18 >= 1, CS6 + CS9 + CS13 >= 1, CS7 + CS14 + CS20 + CS22 >= 1, CS11 + CS16 + CS19 >= 1, CS3 + CS10 >= 1, CS15 + CS21 >= 1, CS4=1, CS1=1,

Page 11 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL CS5=1, CS2=1.

1.3

Solving using TORA

This linear integer programming has 22 decision variables and 13 constraints. The result of feeding this data into Tora and choosing Manual B&B search is given below.

Page 12 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Page 13 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Page 14 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Page 15 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

Page 16 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

As we can see TORA identified Two feasible solutions and the most optimal solution is identified at iteration 187. and verified at iteration 193. The best value of the objective function is 17. This means that there need to be only 11 discrete coil sizes are to be rollout out of which The coil CS15 of coil size 88 has to rollout 7 times in order to meet all the nearby sizes. Therefore total no. of coil rollout will be 17 which is the optimal solution.

As recommended by TORA, the discrete coil sizes to rollout in order to yield the best possible objective while satisfying all constraints is given below.

Coil Size Code CS1 CS2 CS4 CS5 CS8 CS10 CS11 CS12 CS13 CS15 CS22

Discrete Size 144 192 136 85 14 72 54 12 25 88 39

Page 17 of 18

OR_PROJECT_JAMSHEDPUR_PGCLSCM3_OPTIMIZATION OF COIL SIZES OF TCIL

With the above solution, the total revenue incurred would be 65044000 INR which satisfies our constraint of achieving minimum revenue of 65000000 INR. Additionally setup time is 29.5 min in a complete run. This satisfies our constraint of minimizing the overall setup time to less than 30 mins. Summary of results from TORA Number of Optimal discrete campaign coil sizes Overall revenue from one run Total Number of Optimal discrete campaign coil run Total setup time in a complete run

11 65044000 INR 17 19+10.5=29.5 min.

------------------ ****

----------------

*****

--------------

Page 18 of 18