The Coca-Cola Company

1
The Coca-Cola Company

• Develops products
• Produces the advertising and programs to support
  those products, and
• Sells syrup concentrate to Coca-Cola Enterprises
  and other bottlers, etc.

2
Coca Cola Enterprises

• Combines the product concentrate with other
  ingredients to manufacture and package our
  beverages.
• Markets and distributes products to retail
  customers and consumers.

3
Coca Cola Enterprises

• The largest soft-drink bottler in the world,
• The Coca Cola Company owns 42 of the
  outstanding common stock of Coca-Cola Enterprises
• Net concentrate/syrup sales to Coca-Cola
  Enterprises were 3.1 billion in 1998 or
  approximately 16 of sales.
• 3.8 billion unit cases in 1998
• Net operating revenues of 13.4 billion
• EBITDA 1.989 billion

4
Full Service Business

• CCEs vending machine operations
• Owns and operates approximately 200,000 vending
  machines in the US
• North Metro Atlanta Sales Center
• approximately 2,000 machines
• approximately 8 drivers
• area covering 190 sq. miles

5
Vending Machines

• Support 4 to 12 flavors
• Hold 8 to 12 columns of cans
• 30 cans per column

6
Our Example

• 5 Flavors
• 10 columns
• Customer service -- in-stock probability for all
  flavors 99

7
Issues

• Which flavors do we stock?
• How many columns do we stock for each flavor?
• How often to we restock the machine?
• How do we build driver routes?
• How many drivers and trucks do we need?

8
Other related questions

• Can we make some of these problems go away?
• Vending machine design
• Size
• Flexibility
• Number of flavors

9
Current Operations

• Machine put on 7, 14, 21, day schedule based on
  volume
• Drivers assigned routes to cover machines
• Missed machines rolled over to next day
• Driver allocates columns to flavors and fills
• Drive pay partly based on cases loaded
• Company prescribes some flavors
• Core flavors and new flavors

10
Which flavors do we stock?

• What are the drivers?
• Revenue

11
Our set up

• Flavors we must carry
• Coke
• Diet Coke
• Sprite
• Other flavors well consider
• Caffeine free diet coke
• Minute Maid
• Nestea

12
What data do we need?
13
Maximize Revenue

• What flavors?

14
A better model?

• Customer profiles
• Diet anything
• Any variety of Coke
• Healthy
• Fraction of all customers fitting profile
• Choose flavors that satisfy the greatest fraction
  of the population

15
Example
16
An Optimization Model
17
How many columns?

• We have chosen flavors
• We know expected sales rates (possibly based on
  what else is in the machine)
• We stock so that...

18
The Bottleneck

• First run out of some flavor as late as possible

19
How often to restock?

• What are the issues?

20
Service Level
Poisson CDF Probability of at most Stock Level
arrivals in Restock
Interval days
21
Service Level vs Interval