aoml/cases/case_2/case_2_description.md

# Case 2: Optimizing network design to minimize costs

After successfully finishing your first engagement with Beanie Limited, Elisa
has praised you enthusiastically in conversations with Charles Murray, Beanie
Limited's COO (Chief Operations Officer). Charles is responsible for the entire
manufacturing and supply chain organization of Beanie Limited in Europe and
reports directly to Beanie Limited's CEO.

Given Charles role, he gets involved in larger, strategical and long-term
decisions when we compare with Elisa. One of the hot topics that is currently
in Charles mind is the next plan for coffee beans reception in European docks.
Charles' office has reached out to you to prepare a report to assist in this
highly important decision by using optimisation techniques.

As you are probably aware, coffee beans are not grown in Europe. World
production is divided across South/Central America, Africa and South East Asia.
Beanie Limited purchases all of its coffee beans from different providers in
America, mainly in Brasil and Colombia (these two countries account for almost
40% of the world production). Beanie Limited procurement teams execute
purchases with local providers at hose locations and then the coffee beans are
shipped in container cargo ships to European docks.

Docks are a natural bottleneck in supply chains. Dock capacity in europe is
limited, and both storage and handling (the activities related with loading and
unloading goods on ships) in docks are expensive services. Charles thinks that
Beanie Limited has not paid enough attention to this part of the supply chain
since covid-19 radically changed the landscape (total costs for trans-oceanic
freight of standard containers have seen five-fold increases during the
pandemic) and wants to evaluate if the current way of working can be improved.

Currently, Beanie Limited takes a very simple approach: all the beans purchased
in America reach Europe on the Rotterdam docks (the largest in Europe). The
Amsterdam docks are used sparingly whenever there are high activity periods or
the Rotterdam docks are under a lot of stress. Charles believes that there is
an opportunity to reduce costs and make their supply chain more resilient if
the company distributes their reception points across more docks in Europe.

Charles' team has initiated conversations with 8 different docks throughout
Europe:

- Rotterdam
- Antwerp
- Hamburg
- Amsterdam
- Marseille
- Algeciras
- Valencia
- Genoa

In the upcoming months, Charles team must sign contracts with some of these
docks to ensure incoming capacity for the coffee beans coming from America.
This means they will agree with the docks on the expected handled volumes and
thus they must decide with which docks they want to work and how much volume
they will assign to each. The team has collected the details provided by the
docks' companies for you to study. This information includes the capacity the
docks could commit for Beanie Limited, as well as the prices for handling
Beanie Limited's 40 feet containers through the dock.

Charles wants you to use your optimization skills to assess the different
options and recommend the best decisions for the company regarding how much
volume to put through each dock. He hopes you can come up with a plan where
Beanie Limited ensures it will have enough capacity, while at the same time
costs are as low as possible.

## Detailed task definition

- Below you will find four levels of questions. Levels 1 to 3 are compulsory.
  Level 4 is optional.
- You need to write a report document where you answer the questions of the
  different levels. This report should be directed towards Charles, should give
  him clear recommendations and should justify these recommendations. It's
  important for you to reflect your methodology to back your proposals.
- Each level is worth 2 points out of a total of 10. The 2 missing points will
  grade the clarity and structure of your report and code.
- You need to use a Python notebook to solve all levels. A helper notebook is
  provided. Please attach a notebook that shows your
  solution/proposal/analysis.
- Include your team number, names and student IDs in all your deliverables.

## Data

A few facts:

- Charles' team estimates that Beanie Limited will need to receive 1,500,000
  metric tons of coffee beans in European docks during next year.
- The category being negotiated is 40 feet containers. 40 feet containers have
  a a capacity of 66 cubic meters.
- One cubic meter of coffee beans weights approximately 450 kgrs.

Charles' team has shared with you a table with the prices proposed by the
different docks for 40ft containers. You can also find the maximum capacity
that the dock is willing to provide to Beanie Limited (the capacity is
described as a count of 40ft containers).

## Levels

Level 1

Explore historical data and current proposals. Do you think there is a chance
to reduce costs? Why?

Level 2

With the price and capacity data provided for each dock, Charles would like you
to find out what is the optimal distribution across the different options for
next year. He is expecting you to provide the exact numbers, as well as the
expected costs that would result from your proposal.

Level 3

As it tends to be in these projects, sometimes new information appears in the
middle of the project. Charles' team has reached out to let you know that they
have some additional details from the different ports. The following docks have
a sign-up fee. This means that, if Beanie Limited wants to do any business with
them at all, they need to pay this fee. This fee is only paid once and is
independent of the container volume that goes through the dock.

- Algeciras: 800,000€
- Marseille: 500,000€
- Antwerp: 1,000,000€

Charles wants you to reassess the situation with the new data and provide the
adequate solution with the new options. He also would like to understand how
these changes impact the solution you provided for level 2 and the overall
results for Beanie Limited.

Level 4

After presenting your results from level 3, Charles is very happy with your
work, although there is something bothering him. Even though your proposal
sounds reasonable, he is concerned that splitting the operations between too
many docks might make European land logistics operations too complex and end up
causing higher costs in their truck transportation that cancel the potential 
savings that cana be obtained in docks operations.

Charles doesn't have numbers currently, so there is no way to tackle this
properly. To have the necessary information to think about this in the future,
he would like you to repeat your analysis with a new condition in place: to
only use a maximum of 3 docks in your proposal. Charles wants to know what
would be the optimal decision while restricting the used docks to that number.

Finally, to spice things up, one of the analysts in Charles' team also calls
you to inform that the management from the Rotterdam docks has warned Beanie
Limited that they have a new minimum volume policy in place. They will only
make business with Beanie Limited if they commit to handle, at least, 30000
thousand containers through Rotterdam.