We all heard the news about AI enabling billions of dollars of savings for banks, airlines or electric network managers. But even if your company is no Amazon (yet), it can still make a large gain by applying Mathematical Optimization techniques. Today, I will briefly discuss two use cases of Mathematical Optimization amongst SMEs throughout the world. Read on to find out how the smaller players cut their piece of AI-powered cake!
Saving EUR 370,000 p.a. and making the business profitable
A Singaporean freight forwarder, classified as an SME, found itself unprofitable. Its owners believed that the firm’s schedulers were having difficulty optimizing the loading capacity. And indeed, after some analyses, it turned out that the company’s truck fleet was underutilized by some two-thirds of capacity. Mind-blowing – no wonder they couldn’t break even…
But then, mathematicians from NUS and Nanyang Polytechnic were invited to come up with an optimization algorithm – and they succeeded.
Their work enabled savings of up to S$567k, or EUR370k per annum, thanks to the increased average load and improved placement of cargo on vehicles. Impressive!
Cutting the production costs by 4%
Let us now consider a case of a furniture factory in Brasil (classified as a small business), studied by Vanzela et al.
Its owners looked for ways to improve its operational efficiency, without expensive capital investments.
They achieved a saving of approx. 4% of production costs, which translates to approx. EUR 50k per annum (not bad at all!).
This was possible thanks to the integrated optimization of lot sizing (e.g. deciding about the production sequence – what, when and how much) and cutting stock (the way in which wooden boards were cut to form ingredients of the furniture produced).
Would you like to find out how can Mathematical Optimization help your SME? Reach out to me and we’ll figure it out!
Thanks for reading – hope you found these case studies inspiring!
Next week I will tell you a story of an industry which benefits from Mathematical Optimization since its dawn… Curious? Stay tuned!