Edelman Competition Abstracts
All presentations take place in the Vista Ballroom at the Hyatt Regency.
Carlson Rezidor Hotel Group Maximizes Revenue through Improved Demand Management and Price Optimization
Carlson Rezidor Hotel Group: Frederic Deschamps, Kathleen Mallery, James Van Sistine, Kyle Christianson, James Fuller
JDA Software Group: Pelin Pekgün, Ronald P. Menich, Suresh Acharya, Phillip Finch
Carlson Rezidor Hotel Group collaborated with JDA Software Group to use operations research to drive higher revenue for its hoteliers and to stay ahead of the competition. This highly innovative revenue optimization project, SNAP, which stands for Stay Night Automated Pricing, started with enterprise demand forecasting across 600 U.S. properties in 2007. It was followed by a large-scale network optimization solution to dynamically optimize stay night rates based on price elasticity of demand, competitor rates, remaining inventory availability, demand forecasts and business rules. Starting from the optimization prototyping results in 2008, Carlson Rezidor Hotel Group consistently measured a 2-4% revenue improvement in compliant hotels over noncompliant ones. To date, compliant hotels increased revenue by more than $16 million annually. After a successful deployment in the Americas, Carlson Rezidor Hotel Group extended the partnership with JDA to roll out SNAP globally. The worldwide revenue from the solution is anticipated to exceed $30 million annually.
Supply Chain-Wide Optimization at TNT Express
TNT Express: Marie-Christine Lombard, Chris Goossens, Marco Hendriks
Tilburg University: Hein Fleuren, Ineke Meuffels
ORTEC: John Poppelaars
TNT Express is one of the world’s leading express delivery companies. The introduction of operations research (O.R.) at TNT Express during the past seven years has significantly improved decision-making quality and resulted in millions of Euros in cost savings. The Global Optimization Program (GO) initiative has led to the development of an entire suite of optimization solutions and the GO Academy, TNT’s management development program for teaching the optimization principles. The tools and available knowledge allow operating units to analyze performance, identify optimization opportunities and overcome operational challenges. To date, the most significant savings originate from the network routing and scheduling solution (TRANS), the tactical route planning solution for pickups and deliveries (SHORTREC), and the supply chain solution (DELTA Supply Chain). As a result of all these initiatives, O.R. is now an effective part of TNT Express' DNA, and over the period 2008-2011, more than €207 million in savings were realized.
Centers for Disease Control and Prevention: Advancing Public Health and Medical Preparedness with Operations Research
Centers for Disease Control and Prevention: Eva K Lee, Ferdinand Pietz, Bernard Benecke, Jacquelyn Mason, Greg Burel
Planning for a catastrophe involving a disease outbreak with the potential for mass casualties is a significant challenge for emergency managers. CDC public health experts teamed with operations researchers to devise sophisticated modeling and computational strategies that address challenges in mass dispensing. The O.R. technology is integrated into a powerful information decision-support suite, RealOpt©, for tactical and strategic operational planning. RealOpt has been used in hundreds of drills and dispensing events. Careful before/after studies conducted in a sample of these events illustrate throughput efficiencies improved by 175% to 1000%, and staffing needs reduced by 32% to 85%. Having been widely distributed, the RealOpt system has a U.S. user base of over 4,000 public health and emergency directors. By dramatically improving mass dispensing capability and efficiency under limited resources and stressed environments, this work has the potential to enable rapid and effective interventions for at-risk populations, and to lessen the subsequent disease cost, care burden, mortality and economic impact.
Optimizing Capital Investment Decisions at Intel Corporation
Intel Corporation: Robert Bruck, Karl G. Kempf, Erik F. Hertzler, Timothy R. Rosenberg
Stanford University: Feryal Erhun, Chen Peng
Intel spends over $5 billion annually on manufacturing equipment. With increasing lead times from equipment suppliers and increasing difficulty in forecasting market demand, optimizing capital investment decisions is a significant managerial challenge. A “Capital Supply Chain Velocity Program” was developed for ordering, shipping and installing production equipment. At the core of the Velocity Program is a new procurement framework, dual-mode equipment procurement (DMEP), utilizing dual sourcing and option contracts to optimize capital investments. DMEP seamlessly combines statistical forecasting with Monte Carlo simulation and stochastic programming, and includes built-in scenario and sensitivity analysis capabilities to support Intel’s strategic, tactical and executional procurement decisions. The Velocity Program and DMEP have resulted in hundreds of millions of dollars in documented cost savings and at least 2 billion dollars in revenue upside for a manufacturing process transition during a period of economic crisis. The framework is now guiding Intel’s decisions for manufacturing process transitions.
Maximizing Fleet-Wide Revenue Routing at Danaos
Danaos: Takis Varelas, Sofia Archontaki
Technological Education Institute of Crete: John Dimotikalis
University of Strathclyde: Osman Turan, Iraklis Lazakis
Anangel Maritime Services: Orestis Varelas
Danaos Corporation, one of the world’s largest containership owners, has a fleet of 60 containerships. Danaos developed the innovative “Operations Research In Ship MAnagement” (ORISMA) toolkit that effectively optimizes ship routing. ORISMA offers a clear answer to the conventional dilemma between least cost and faster voyage by maximizing revenue using all relevant information: financial data, hydrodynamic models, weather conditions and marketing forecasts. Its power comes from looking at the big picture - it considers economic potential even after voyage completion and drives fleet-wide instead of single-vessel performance. Using O.R. and expert knowledge, a full suite of world-class capabilities in scheduling optimization, intelligent voyage planning, and bunkering and chartering were developed. In its first year of implementation ORISMA has resulted in clear bottom-line benefits. This award-winning product, in addition to profit maximization, minimizes carbon emissions, reduces workload and increases customer satisfaction.
Hewlett-Packard: Delivering Profitable Growth for HPDirect.com using Operations Research
Hewlett-Packard: Suresh Subramanian, David W. Hill, Rohit Tandon, Arnab Chakraborty, Girish Srinivasan, Ahmar Abdullah, Bharathan Shamasundar, Manav Shroff, Prasanna Dhore, Ritwik Sinha
Hewlett-Packard (HP) is the world’s largest provider of information technology infrastructure, software, services and solutions, to individuals and organizations. Advancements in Internet and mobile technology in the past decade, and consumers’ desire to shop “anytime, anywhere” have seen worldwide eCommerce grow three-fold from $160 billion to $481 billion in the 2004-2009 period. Several operations research solutions were developed to address a variety of problems that manifest along the eCommerce value chain. Time series forecasting and regression modeling techniques were applied to help identify and quantify the impact of key drivers of online traffic. Bayesian modeling, Markov analysis and Linear Discriminant analysis methods are used to develop a holistic customer targeting engine that doubles purchase conversion rates and increases order sizes up to 30%. Since 2009, the integration of these solutions into the financial and marketing planning and warehouse operations processes has helped deliver $117 million in sales for HPDirect.com, thereby helping HP establish an effective alternate route to market.