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Embotelladoras ARCA Uses Operations Research to Improve Territory Design Plans

Author

Listed:
  • J. Fabián López-Pérez

    (Universidad Autónoma de Nuevo León (UANL), San Nicolás de los Garza, NL 66450, Mexico)

  • Roger Z. Ríos-Mercado

    (Universidad Autónoma de Nuevo León (UANL), San Nicolás de los Garza, NL 66450, Mexico)

Abstract

Embotelladoras ARCA is a Mexican company dedicated to the production, distribution, and sales of soft drink brands owned by the Coca-Cola Company, ARCA, and third parties. One of the most relevant problems the company faces is how to segment its customers into territories to accommodate the most efficient handling of marketing and distribution decisions. This territory design must also satisfy several planning requirements, such as territory compactness, connectivity, and balancing, and similarity with the existing design. Before 2009, the company planners defined these units based on their experiences, without using quantitative tools, giving more weight to the territory compactness criterion. This method of definition led to a number of undesirable issues, including highly unbalanced territories; that is, the final plans had large disparities in size with respect to both number of customers and total product demand. In this paper, we apply operations research methods to determine configurations of the territorial units that ensure territory balance with respect to both number of customers and total product demand, while complying with other important planning requirements and maximizing territory compactness. Using this methodology has resulted in significant enhancements with respect to the territory imbalance issue while maintaining the level of territory compactness. We also highlight additional benefits of this approach. Embotelladoras ARCA has adopted this proposed tool to make its design decisions.

Suggested Citation

  • J. Fabián López-Pérez & Roger Z. Ríos-Mercado, 2013. "Embotelladoras ARCA Uses Operations Research to Improve Territory Design Plans," Interfaces, INFORMS, vol. 43(3), pages 209-220, May-June.
    • Handle: RePEc:inm:orinte:v:43:y:2013:i:3:p:209-220
    DOI: 10.1287/inte.1120.0675
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    References listed on IDEAS

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    1. Juan Carlos Duque & Raúl Ramos & Jordi Suriñach, 2007. "Supervised Regionalization Methods: A Survey," International Regional Science Review, , vol. 30(3), pages 195-220, July.
    2. María Salazar-Aguilar & Roger Ríos-Mercado & Mauricio Cabrera-Ríos, 2011. "New Models for Commercial Territory Design," Networks and Spatial Economics, Springer, vol. 11(3), pages 487-507, September.
    3. Andris A. Zoltners & Prabhakant Sinha, 2005. "The 2004 ISMS Practice Prize Winner—Sales Territory Design: Thirty Years of Modeling and Implementation," Marketing Science, INFORMS, vol. 24(3), pages 313-331, September.
    4. M. Salazar-Aguilar & Roger Ríos-Mercado & José González-Velarde & Julián Molina, 2012. "Multiobjective scatter search for a commercial territory design problem," Annals of Operations Research, Springer, vol. 199(1), pages 343-360, October.
    5. Andris A. Zoltners & Prabhakant Sinha, 1983. "Sales Territory Alignment: A Review and Model," Management Science, INFORMS, vol. 29(11), pages 1237-1256, November.
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