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Strategic and Operational Management with Optimization at Tata Steel

Author

Listed:
  • Gopal P. Sinha
  • B. S. Chandrasekaran
  • Niloy Mitter

    (Operational Research, The Tata Iron and Steel Company Limited, Jamshedpur 831001, India)

  • Goutam Dutta

    (Department of Industrial Engineering and Management Science, Northwestern University, Evanston, Illinois 60208-3119)

  • Sudhir B. Singh

    (Town Division, The Tata Iron and Steel Company Limited, Jamshedpur 831001, India)

  • Aditya Roy Choudhury

    (Marketing Division, The Tata Iron and Steel Company Limited, Jamshedpur 831001, India)

  • P. N. Roy

    (Ex. Principal, General Manager, The Tata Iron and Steel Company Limited, Jamshedpur 831001, India)

Abstract

Tata Steel has been striving to optimize its operations amidst scarce resources and capacity imbalances. To provide decision support, we developed a mathematical model based on mixed-integer linear-programming (MILP) and hierarchical optimization between 1983 and 1986. It considers marketing constraints, capacities, yields, profitability, routes, energy, and oxygen balances. Its use just for optimal distribution of power has provided a benefit of US $73 million in the first year of implementation (1986–1987). Tata Steel has realized other benefits, such as optimal distribution of scarce oxygen and liquid iron, optimal power cogeneration levels, break-even prices and quantities of purchased scrap, and optimal conversion of semifinished steel into finished products by other companies functioning as conversion agents. In the early ’8Os, the model shifted Tata Steel’s emphasis from maximizing tonnage to maximizing contribution to profits.

Suggested Citation

  • Gopal P. Sinha & B. S. Chandrasekaran & Niloy Mitter & Goutam Dutta & Sudhir B. Singh & Aditya Roy Choudhury & P. N. Roy, 1995. "Strategic and Operational Management with Optimization at Tata Steel," Interfaces, INFORMS, vol. 25(1), pages 6-19, February.
    • Handle: RePEc:inm:orinte:v:25:y:1995:i:1:p:6-19
    DOI: 10.1287/inte.25.1.6
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    Citations

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    Cited by:

    1. Kong, Haining & Qi, Ershi & Li, Hui & Li, Gang & Zhang, Xing, 2010. "An MILP model for optimization of byproduct gases in the integrated iron and steel plant," Applied Energy, Elsevier, vol. 87(7), pages 2156-2163, July.
    2. J. F. F. Almeida & S. V. Conceição & L. R. Pinto & B. R. P. Oliveira & L. F. Rodrigues, 2022. "Optimal sales and operations planning for integrated steel industries," Annals of Operations Research, Springer, vol. 315(2), pages 773-790, August.
    3. Goutam Dutta & Robert Fourer, 2001. "A Survey of Mathematical Programming Applications in Integrated Steel Plants," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 387-400.
    4. Goutam Dutta, 2000. "Lessons for Success in OR/MS Practice Gained from Experiences in Indian and US Steel Plants," Interfaces, INFORMS, vol. 30(5), pages 23-30, October.
    5. Peter C. Bell & Chris K. Anderson, 2002. "In Search of Strategic Operations Research/Management Science," Interfaces, INFORMS, vol. 32(2), pages 28-40, April.
    6. Brian Denton & Diwakar Gupta & Keith Jawahir, 2003. "Managing Increasing Product Variety at Integrated Steel Mills," Interfaces, INFORMS, vol. 33(2), pages 41-53, April.
    7. Zhao, Xiancong & Bai, Hao & Lu, Xin & Shi, Qi & Han, Jiehai, 2015. "A MILP model concerning the optimisation of penalty factors for the short-term distribution of byproduct gases produced in the iron and steel making process," Applied Energy, Elsevier, vol. 148(C), pages 142-158.
    8. G Dutta & N Gupta & R Fourer, 2011. "An optimization-based decision support system for strategic planning in a process industry: the case of aluminium company in India," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(4), pages 616-626, April.
    9. Dutta, Goutam & Gupta, Narain & Robert Fourer, 2008. "An Optimization-Based Decision Support System for Strategic Planning in a Process Industry: The Case of an Aluminum Company in India," IIMA Working Papers WP2008-12-06, Indian Institute of Management Ahmedabad, Research and Publication Department.
    10. Singer, Marcos & Donoso, Patricio, 2006. "Strategic decision-making at a steel manufacturer assisted by linear programming," Journal of Business Research, Elsevier, vol. 59(3), pages 387-390, March.
    11. de Oliveira Junior, Valter B. & Pena, João G. Coelho & Salles, José L. Félix, 2016. "An improved plant-wide multiperiod optimization model of a byproduct gas supply system in the iron and steel-making process," Applied Energy, Elsevier, vol. 164(C), pages 462-474.
    12. Peter C. Bell & Chris K. Anderson & Stephen P. Kaiser, 2003. "Strategic Operations Research and the Edelman Prize Finalist Applications 1989--1998," Operations Research, INFORMS, vol. 51(1), pages 17-31, February.
    13. Ellis L. Johnson & George L. Nemhauser & Martin W.P. Savelsbergh, 2000. "Progress in Linear Programming-Based Algorithms for Integer Programming: An Exposition," INFORMS Journal on Computing, INFORMS, vol. 12(1), pages 2-23, February.

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