Supply chain network design to adjust with acquisition of competitor: Case study of a cement company in Indonesia

In this paper, the problems encountered by the largest market share cement manufacturer in Indonesia after acquiring a competitor is considered. These problems consist of determining the right allocation of production facilities to serve a market, the decision to continue to operate or stop the operation of a grinding and or packing plants, determining the number of clinkers sent from the integrated cement plants to the grinding plants and determining of the amount of cement production in each production facility. This research was conducted with the aim of designing the supply chain network in order to minimize total annualized cost in meeting demand in all marketing areas in Indonesia. The supply chain network is mathematically modelled and the optimal solution is solved using mixed integer linear programming (MILP) method by considering the fixed costs of facility infrastructure, clinker and cement bag and bulk unit production and distribution costs. The results provide recommendation that in the current oversupplied market situation to close 21 out of the 31 units of the packing plant and 2 of 3 units of the grinding plant along with the allocation of each facility with a utilization rate of 76.6% of the capacity owned after the acquisition.