beer in classroom _case study on location &distribution decision

7/28/2019 Beer in Classroom _case Study on Location &Distribution Decision

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Beer in the Classroom: A Case Study of Locationand Distribution Decisions

Murat KksalanIndustri al Engi neeri ng D epartm ent

Mi ddl e East Techni cal U ni versi tykoksalan@ ie.metu.edu.tr

F. Sibel SalmanC o ll e ge O f E n gi n ee r in g

K o U n i v er s i t yssalman@ ku.edu.tr

AbstractW e di s cu s s o u r e x pe r ie n ce i n u s in g a c as e st u d y o f lo c at i on a n d d i s tr i bu t io n d e c is i o ns i n u n d er g ra d ua t e a n dM B A l ev e l M an a g e m en t S c i en c e a nd O p e r at i o n s R e s e a rc h c o u r s es . T h e An a d o l u E f e s c a s e in t r o d u ce s a m u l ti -p e r i od s tr a t e g ic p l a n n in g p r o b l em t h a t r e q u ir e s t h e o p t i mi z a t io n o f b r e w e ry l o c a ti o n a n d c a p a ci t y e x p a ns i o n

d ec is io n s i n a dd it io n t o m al t a nd b e er d i st r ib ut io n d e ci si on s . Th e c as e h as b ee n u se d e ff ec t iv el y t o i mp ro ves t ud e n ts ' s k il l s o n m o de l in g , s o lv i ng a n d i n t er p re t in g t h e o u t pu t s o f l i ne a r p r og r am s a n d m i xe d i n te g er p r og r am s .T h e c as e m a te r ia l i s b a se d u p on p a st c o l la b or a ti o n w i th E f e s o n a n u m be r o f p ro j ec t s . Th e p r ob l em i s a h y p o-t h et i ca l on e bu t is s i mi l ar t o p r ob l em s E f e s h a s b e en f a ci n g. E f es ' r ea l di s tr i bu t io n s y s te m ha s b e en s i mp l if i edfor the purpose of keeping the m odel size m anageable.

Editor's note: T hi s i s a p df co py o f a n h tm l d oc um en t w hi ch r es id es a t http://ite.pubs.inform s.org/Vol4No1/KoksalanSalm an/

1 . S yn op si s o f t he C as e S tu dyA n ad o lu E f es i s t h e l ea d in g b e er p r od u ce r a n d d i st r ib -

u t or i n T u rk e y w i th e m er g in g i n te r na t io n al p r es e n cei n E a s t e r n E u r o p e a n d C en t r a l A s i a . U p p e r m a n a ge -m e nt h a s b e en a n ti c ip a ti n g i n cr e as e s i n b e er d e ma n dt h a t w i l l s u rp a s s t h e a v a il a b l e b ee r p r o d u c t io n c a p a c-i ty a nd h as p la ns t o o pe n n ew b re we ri es a nd p os s ib lye x p a nd t h e c a p a c i ty o v e r t h e n e x t s e v e ra l y e a r s . T h eC EO wa nt s t o d ec id e o n t he ti mi ng a nd lo ca ti on o f

brewery openings and possible capacity expansions.I n a d d i t io n , t he m al t an d b ee r d is t r i b ut i o n n e t w o rkh as t o b e o pt im iz ed in o rd er to p ro vi de le ve ra gea g a in s t t h e i nc r e a s in g c o m p et i t i o n i n t h e b e er m a r k et .

T h e ma i n p r o b l em d i s c us s e d i n t h e c a se i s a m u lt i - p e -r i od s t ra t eg i c p l an n in g p r ob l em t h at r e qu i re s t h e o p ti -m i za t io n o f b r e we r y l o ca t io n a n d c a pa c it y e x pa n s io nd ec is io n s i n a dd i ti on t o m al t a nd be er d is t ri bu t io nd e c i s io n s o v e r t h e n e xt t h r e e y e a rs . T h e o b j e ct i v e i s t om inim ize the present value of the transportation costso v e r a 2 0 -y e a r h o r iz o n a n d t h e p r e s en t v a l u e o f t h ec ap ac it y e xp an si on c os ts s o t ha t a ll o f t he b ee r d em an da t t h e d i s tr i bu t io n c e nt e rs i s s a ti s fi e d i n e a ch y e ar . T h e

t r an s po r ta t io n c o st s i n cl u de t h e c o st s o f s h ip p in g m a ltf r om m al t p la n ts t o b re w er i es a n d b e er f r om b r ew er i es

t o d i s tr i bu t or s . T o ta l b e er p r o d uc t io n c a pa c it y c a n b ee xp an de d b y o pe ni ng a n ew b re we ry a t o ne o f t h ep o t e n ti a l t h r e e s i t e s , a n d by e x p a nd i n g t h e c ap a c i tyo f t h e n e w l y e s t a b li s h e d b r e we r y , i f n e c e s s ar y , o v e rthe next three years.

2 . T e a chi ng O bj ec t i ve sT h e m a in o b je c t iv e of u si n g t h e A n ad o l u E f es c a se i st o h elp s tu de nt s i mpr ove t he ir s ki ll s t o s tr uc tur e,m o d e l, s o l v e a n d i nt e r p r et r e s u lt s o n a p r o bl e m t ha ti s c om pl ex e no ug h t o c ap tu re m an y a sp ec ts o f a r ea l

l i fe pr o bl e m b u t s i mp l e e n ou g h t o s t ud y a s a pa r t o fa course.

I n p a rt i cu l ar , w e a i m t o h e lp s t u de n t s i m pr o ve th e irs ki ll s t o

s e e t h e b r o ad e r p i ct u re b ut c o nf i ne t he p ro b le mw i t h i n p r a c t ic a l b o u n d a r i es ,

I N F O R M S I S S N: 1 5 3 2 - 0 5 4565I N FO R MS T r an s ca t io n s o n E d uc a ti o n 4:1 (65-77)

KOKSA LA N & SA LMA NB e er in t h e C l as s ro o m: A Ca s e S t ud y o f L o ca t io n a n d D i st r ib u ti o n D e ci s io n s
mailto:[email protected]:[email protected]://ite.pubs.informs.org/Vol4No1/%20KoksalanSalman/http://ite.pubs.informs.org/Vol4No1/%20KoksalanSalman/http://ite.pubs.informs.org/http://ite.pubs.informs.org/http://ite.pubs.informs.org/Vol4No1/%20KoksalanSalman/http://ite.pubs.informs.org/Vol4No1/%20KoksalanSalman/mailto:[email protected]:[email protected]


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c o ns tr uc t a li ne ar p ro g ra mm in g m od el f or a r ea -s o n a b ly l a r g e pr o b l e m,

c on st ru ct a m ix ed i nt eg er p ro gr am mi ng m od el f ora r e as o n ab l y l a rg e p r o b le m ,

s o lv e t he mo d el s u si ng s of t wa re ( E xc el s o lv er int h is c a se ) ,

m ak e s e ns it iv it y a nd w ha t- if an al ys is ,

i nt er pr et r e su lt s a nd m a ke r e co mm en d at io n s.

W e al s o a i m t o

i nf or m s t ud en t s o n t he b ev er ag e i nd u st ry , a s w el la s i nt er na ti on al a nd d om es t ic o pe ra ti on s i n a ne m e r g in g m a r k et b y s u m m ar i z i ng s t r a t e gi c is s u e si m po r t an t f or t h e co m pa n y, a n d g i vi n g a no v e r v ie w o f t he b us i n e s s e n v i r on m e n t , c o m p an yi n fo r ma t io n , t h e be e r m ar k et i n T u rk e y a n d t h et r e n d s i n t h e g l o b a l b e e r m a r k et ,

p ro vi de s tu de nt s a n u nd er st an di ng o f t he i mp li ca -t i o n s o f i m p l em e n t in g c o s t - e ff e c t iv e s o l u t io n s o b -t a i n e d f r o m a m a t h em a t i ca l m o d e l w i t h t h e h e l po f d i sc u s s i o n q u e s t io n s ,

l et t he s tud en ts s ee t he pr ob lem fr om bo th ma rk et -i n g a n d o p er a ti o ns p e rs p ec t iv e s t h r ou g h t h e d i s -c u ss i o ns e m be d d ed i n t h e c as e ,

h el p t h e s tu de nt s t o g ai n i ns ig ht o n u nd er st an di ngt h e de l ic a te b al a nc e s i n a s u pp l y c h ai n b y m o di f y-i n g t h e mo d e ls a n d an a ly z in g t h e mo d e l o u tp u tsfor several scenarios.

3 . C a se A n a ly s isT h e c a se a n al y si s r e qu i re s t w o m a in p a rt s :

1. Improving the current distribution system. T h e c u rr e nts h ip m en t p l an e n fo r ce s c e rt a in r e st r ic t io n s d u e t oe xi st in g r el at io n s b et we en c er t ai n b re we ri es a nddistributors. The Vice President of m arketing feelst h at it is i m po r t an t t o k e ep s o me of th e c u rr e nts h ip me nt r o ut es e ve n i f t he y i nc re as e t he c o st s al i tt l e b i t. T h e d i st r ib u ti o n s y st e m c a n b e o p ti m iz e d

by a l i n e ar p r o g ra m m in g m o d el , f i rs t k e ep i ng t h ed e s ir e d e xi s ti n g s h ip m en t r o u te s , a nd t h e n b y r e -l a xi n g t h e se l i m it a t io n s a n d s u mm a ri z in g t h e r e -s ul ti ng s av in gs i n c os ts . T he s en si ti vi ty o f t hem od el s ol ut io n t o c ha ng es i n a f ew o f th e tr an s-p o rt a t io n c o st s c a n b e a na l yz e d. I n p a rt i cu l ar , t h en ec es sa ry r ed uc ti on i n t ra ns po rt at io n c os ts t ha t

w o ul d j u st i f y k e ep i ng t h e e x is t i ng b r ew e ry - d is t r ib -u t or r e la t io n s c a n b e a n al y ze d . O t he r i np u t p ar a m-e t er c h a ng e s t h at w o u ld m a k e c er t ai n s h ip m en tc ho ic es i n t he c ur re n t d is t ri bu ti on p la n, s uc h a st h e m al t i mp o rt , c o st - ef fe c ti ve m ay a ls o b e s t ud i ed .

2. O p t im i z a ti o n o f d i s t ri b u t io n , l o c a ti o n , a n d c a p a c it y

e x pa n si o n d e ci s io n s o v er t h e n e xt t h r e e y e ar s . T hi s r e-q ui re s b ui ld in g a mixed integer program t o d ec id ew he n a nd w he re t o l oc at e t he n ew b re we ry ,w he th er t o e xp an d it , an d ho w t o s h ip m al t a nd

beer to satisfy beer dem and. In addition to the so-lution of the m ixed integer program , a num ber ofw ha t- if q ue st io ns c an b e a ns we re d u si ng t hem o d e l . E v e n t h o u g h t h e e x i s t in g b r e w in g c a p ac i t yi s s u ff i ci e nt t o c o ve r t he d e ma n d of y e ar 1 , t hev a l u e o f t h e o p p o rt u n i t y c o s t o f c a p i t a l f o r w h ic hi t b ec om es d es ir ab le to o pe n t h e n ew b re we ry i ny ea r 1 c an b e f ou n d. O th er s e ns it iv it y i s su es r el at ed

t o t he e st im at io n o f in pu t pa ra me te rs c an a ls o b eaddressed.

4. Possible Extensions of the Case StudyT h e c as e s t u dy c a n b e e x te n de d i n s e ve r al w a y s.

1 . A s tr ai gh tf or wa rd e xt en si on w ou ld b e t o a sk f ort h e e f fe c ts o f i m po s in g n e w c o ns t ra i nt s o r r e la x in gs o m e o f t h e e x i s t in g c o n s t r ai n t s . O u r e x p er i e n c ei n r ea l li fe p ro bl em s i s t h at m an y c on s tr ai nt s c an

be elim inated if the benefits of elim inating them

a r e s t u d ie d a n d d e m on s t r a t ed t o b e s u f f ic i e n t lyl a r g e. I n a r e a l l if e s t u d y w e c o n d u ct e d , e x po r t i n gwas not profitable and none of the plant m anagersw as e ag er t o e xp or t . T he h ea dq ua rt e rs d id n otw an t t o i mp os e t hi s b ur d en o n a ny o f t he p la nt s

but wanted to continue exports due to strategicr e as o ns . T h ei r s ol u ti o n w a s t o d i vi d e t he b u rd e na pp ro xi ma te ly e qu al ly a mo ng p la nt s d es pi te t h ef a c t t h a t t h er e w e r e c o ns i d e r ab l e d i f fe r e n c es i nt ra ns po rt at io n c os ts o f ex po rt s f ro m di ff er en tplants. We showed the m agnitude of potential

benefits from discontinuing this policy. Studentsc a n b e a s ke d t o e x te n d t he i r mo d e ls t o a n al y ze t h ebenefits from sim ilar strategy changes.

2 . T he s tu d en ts m ay a na ly ze w he th er t h e e xi st in gl o ca t io n s o f b r ew e ri e s a r e d e s ir a bl e . T h e m o de lc o u l d b e s o lv e d b y a l l o wi n g t h e f le x i b il i t y o f r e lo -c a t i n g s o m e ( o r a l l ) o f th e e x i s ti n g b r e w er i e s . Th es o l u t io n w o u l d r ev e a l t he p o t e n t ia l s a v in g s , i nt r a ns p o rt a t io n c o s ts , o f r e lo c a ti n g b r e we r i es . T h e re


http://ite.pubs.informs.org/http://ite.pubs.informs.org/


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m a y b e re a so n ab l e g r o un d s t o f u rt h e r s t u dy r e lo -c a t i o n, if t h e p o t e n t ia l s a v i ng s i n t r a n s po r t a t io nc o s ts t u rn o u t t o b e s u bs t an t i al .

3 . F o r a hi g he r -l e ve l c o ur s e, th e c o mp l ex i ty o f t h ec a s e ma y b e i n cr e a s e d. T h e s t u d e n t s m a y b e a s ke dt o a dd r es s t h e br oa de r m od el o f d ec id in g u po n

w he n a nd w he re t o l oc at e n ew m al t p la nt s i n a dd i-t io n t o t he d ec is io n s i n t h e c ur re nt mo d el . T he yw o u l d h av e t o c o n s i d er t h e b a rl e y s h i p me n t c o s t sf r o m b ar l ey s o ur c es t o m a lt p l a n ts . T h i s w o ul d r e -q u i r e p ro v i d i ng a d d i t io n a l d at a a n d m o d if y i n gs o me o f t h e e x is t in g d a ta t o k e ep t h e m od e l i nt e r-esting.

5 . T e a c hi ng Sug ge s t io ns a nd B e nefi t sT h is i s a d em a nd i ng c a se d es i gn e d t o b e a s si g ne d asa p ro j ec t t o t e am s o f s tu d en t s . I t c ov e rs v a ri o us p a rt s

o f a n i n t r o d uc t o r y l e v e l M an a g e me n t S c i e nc e / O pe r a -t io ns R es ea rc h c ou rs e. I n t hi s s ec ti on w e d is c us s o ure x pe r ie n ce s a n d m ak e s u g ge s ti o ns o n s o m e po s s ib l ew a ys o f us i ng t h e c a se .

5.1. UsageT h is c a se m ay b e us e d in a n i n tr o d uc t or y l e ve l g ra d u-a t e o r a h i g h l e v e l u n d e r gr a d u a te M an a g e m en t S ci -e n ce / Op e ra t io n s R e se a rc h c l as s . I t w o ul d b e e s pe c ia ll ys u i t ab l e f o r u s e i n a f i r s t y e a r Ma n a g em e n t S ci -e n ce / Qu a nt i t at i ve M e th o d s c o ur s e i n a n M B A p r o gr a mt o i m pr o ve s tu d en t s ' s k il l s o n m o de l in g , s o lv i ng a n d

i n te r pr e ti n g t h e o u tp ut s o f l in e ar p r og r am s a n d m ix e dinteger program s.

T hi s c as e ha s b ee n u se d in b ot h t he un de rg ra du at ea nd M B A p r og r am s a t t h e K ra n ne r t S ch o ol o f M an a ge -m e n t , P u rd u e U n i v er s i t y , i n t h e I n t e r na t i o n al M B Ap r o g r am s o f t h e H e l s i nk i S ch o o l of E c o n o mi c s ( b o t hi n t h e f ul l -t i me a n d p ar t -t i me p r og r am s w h er e t h ep ar t- t im e p ro gr am i s s im il ar t o a n e xe cu ti ve M B Ap r o g r am ) , a n d i n t h e u n d e r g r ad u a t e p r o g ra m o f t h eI n d u s t ri a l E n g i n ee r i n g D e p a rt m e n t , M i d d l e E a s t

Technical University.

I n o u r ex p e r ie n c e , w e f ou n d it v e ry u s e f u l t o b r e a k t h ec as e i nt o t wo p ar ts . W e i nt ro du ce t he c as e i n c la ss w it ha s h o rt p r e se n t a t io n w h i l e s t u d y i ng l i n e ar p r o gr a m -m i ng a n d n e tw o rk m o de l s ( T he sl i de s u s ed fo r c l as si n t r o d uc t i o n c a n b e a c c e ss e d h e r e(1) ) . W e as k t h e s tu -

d e nt s t o w o rk o n t h e s t at i c, s i n gl e p er i od d i s t ri b ut i onp r o b le m a t t h a t p o i nt . W e t e l l t h e m t ha t t h e y a r e r e -q u ir e d t o b u il d a l in e ar p r og r am mi n g m o de l u s in g t h ed a t a g iv e n i n t h e c a se . W e p r ov i d e t he E x c e l sp r e a d -s h e e t t h a t c o n t ai n s t h e d a t a ( s e e A p p en d i x , E x h ib i t s6 , 7 , 8, 1 0 ) , a nd t h e c u r r e n t d is t r i b ut i o n s y s t e m ( A p-p e nd i x, E x hi b it 9 ) , w h ic h h e lp s t h e s t u de n ts w i th t h e

p r ep a ra t io n o f t h e E x c el f o r mu l at i o n o f t h e d i s tr i bu t io nm odel. The related Excel file can be accessed here(2).

The students appreciate m odeling, solving, and inter-preting the results of a reasonable-sized linear program -m i n g p r o b l em . T h e d i s t r i bu t i o n m o d e l u s e s

1 . c ap ac it ie s o f m al t pl an t s a nd b re we ri es ,

2 . b ee r de ma nd a t di st ri bu ti on c en t er s ,

3 . s h ip me nt c os t s o f ma lt a nd b ee r, a nd

4 . m al t y ie ld at br ew er ie s a s i np ut da ta .

T h e d e c i s io n v a r i ab l e s r e p r es e n t

1 . t h e a mo u nt o f ma lt s h ip pe d fr om e ac h p la nt t oe ac h b re we ry a nd

2 . t h e a mo un t o f b ee r sh ip pe d fr om e ac h b re we ry t oe a c h d i s t r ib u t o r .

Total shipm ent out CapacityMalt Plants:

Beer brewed from received m alt Beer shipped outMalt - Beer Bal-ance:

Total beer produced CapacityBreweries:

Beer received = Dem andB e e r to D i s t . Ce n -ters:

T h e L P m o d e l co n t a i ns a t o t a l o f 1 8 co n t i n u ou s d e c i -s io n v ar ia bl es a nd 1 3 c on st r ai nt s . It c a n b e s ol ve de a s i ly u s i n g t h e E x c e l S o l v er .

S i n c e t h e mo d e l i s a l i n e a r p ro g r a m , t h e s t ud e n t s h a v e

a c ha n ce t o d o s e ns i t iv i ty a n al y si s .

O u r ex p e r ie n c e i s t h a t t he s t u d en t s l e a r n a l o t b y i n t e r -p r e t in g r e d u c ed c o s t s, s h a d ow p r i c es , a n d t h e c o rr e -s p on d in g r a ng e in f or m at i on i n s u ch a r ea l l i fe - ba s ed

(1) http://ite.pubs.informs.org/Vol4No1/KoksalanSalman/class-introduce.ppt(2) http://ite.pubs.informs.org/Vol4No1/KoksalanSalman/data.xls


http://ite.pubs.informs.org/Vol4No1/KoksalanSalman/class-introduce.ppthttp://ite.pubs.informs.org/Vol4No1/KoksalanSalman/data.xlshttp://ite.pubs.informs.org/http://ite.pubs.informs.org/http://ite.pubs.informs.org/Vol4No1/KoksalanSalman/data.xlshttp://ite.pubs.informs.org/Vol4No1/KoksalanSalman/class-introduce.ppt


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c a se s t u dy . W e as k t h e m t o a n al y ze c h an g es i n m o de lp a r am e t e r s, s u ch a s

1. C os t r ed uc ti on s n ee ded to j us tif y t he ex is tin gbrewery-distributor relations (reduced cost),

2 . C o s t v a lu e s t h a t w o ul d ma k e m a lt i mp o rt c os t - ef -

fective (reduced cost),3 . S en si ti vi ty t o d em an d c h an ge s ( sh ad ow p ri ce ),

4 . S en si ti vi ty t o c ap ac it ie s ( sh ad ow p ri ce ) b y p os in gt h e f o l lo w i n g q u e s t i on s .

Question 1. H o w c a n t h e c u rr e nt d i s tr i bu t io n p l an b ei mp r ov e d? W o ul d t h e s a vi ng s i n c os t s j u st i fy c ha n gi ngt h e e s t a b li s h e d r e l a t io n s b e t w ee n t h e A n k a r a- B u r s aand Istanbul-Antalya brewery-distributor pairs?

Question 2. What should be the annual cost of ship-

p i n g 1 m i l li o n l i t e rs o f be e r f r o m t h e I s t a n bu l b r e w er yt o t he A nt al ya d is t ri bu ti on c en t er , a nd f ro m t h e A nk ar a

brewery to the Bursa distribution center so that it be-c om es o pt im al f or Ef es t o s en d b ee r b et we en t he s epa irs?

Question 3. I s i t c o st - e ff e ct i ve f o r E fe s t o i m po r t m al ti n t h e f i r s t y e a r? I f n o t , u n d e r w h a t i n p ut p a r a m et e rc h a n g es w o u l d i m p o rt i n g m a l t p o s s i bl y b e c o me a v i -able option?

Question 4. T h e l i n e ar pr o g r a mm i n g m o d e l u s e s t h e

dem and forecast for the next year to optim ize the dis-t r ib ut i on p la n, a lt h ou g h d e ma n d i s s u bj e ct t o v ar ia t io no v er t h e ye a rs . D is c us s t h e ef f ec t s o f b ee r d e ma n dv a ri a ti o n o n t r a ns p o rt a t io n c o s ts u s i ng t h e i n fo r m at i oni n t h e s en s it i vi t y r e po r t .

W e a ss ig n t he s ec on d p ar t o f t he c as e a ft er i nt ro du ci ngm i x ed i nt e g e r p r o g r am m i n g i n c l a s s . T h i s p a r t o f th ec as e r eq ui re s o pt im iz in g t h e n ew b re we ry l oc at io na nd c ap ac it y e xp an s io n d ec is io ns i n a dd it io n t o m al ta n d b e er d i s t r i bu t i o n d e c i s io n s o v e r t h e ne x t 3 y e a rs .

H a v i ng s t u d i ed t h e s in g l e pe r i o d di s t r i bu t i o n m o d e lm ak es i t ea si er f or t he s tu de nt s t o c on ce nt r at e onm u lt i pl e pe r io d s a n d 0- 1 va r ia b le s . In t h i s w a y, t h es tu d en ts d o n ot g et d is co ur ag ed in s t ru ct ur in g t h isr e la t iv e ly c o mp l ex m o de l . T h e m u lt i -p e ri o d m o de lr e q u ir e s t h e f o ll o w i ng a d d i t io n a l in p u t d at a :

1 . n o rm al an d e xp an de d c ap ac it ie s o f p ot en t ia lbreweries,

2 . b ee r d em an d a t di st ri bu ti on c en t er s f or 3 y ea rs ,

3 . f ix ed co s ts o f o pe ni ng a nd ex pa nd in g b re we ri es .

T h e d e c i s io n v a r i ab l e s c o n s i s t o f

A mo un t o f m al t s hi pp ed fr om ea ch p la nt to e ac hbrewery each year

A mo un t o f b ee r s hi pp ed fr om ea ch b re we ry t oe a ch d i st r ib u t or e a c h y e ar

B in ar y v ar ia bl e: w he th er o r no t a ne w b re we ry i so p e n e d a t e ac h p o t e n ti a l s i t e ea c h y e a r

B in ar y v ar ia bl e: wh et he r o r n ot th e n ew b re we ryi s e xp an d ed in e ac h y ea r.

T h e o bj e c t i ve i s t o m i n i mi z e t he p r e se n t v a lu e o f t h et r an s po r t at i on c o st s o v er a 2 0 -y e ar h or i zo n a n d t h ec a pa c it y e x pa n si o n c o s ts . T h e t h i r d y e ar s h i p me n tsa r e u se d t o e s t im a te t h e t r a ns p or t at i o n c o st s f o r l at e ry e ar s . T h e m o de l c o ns i st s o f t h e f o ll o wi n g c o ns t r ai n ts .

The m ulti-period m odel required in the case analysisi s l a r g e e n o u g h t o c o n v e y r e a l l i f e i s s u e s , y e t m a n a ge -able for course work. The m odel has 135 continuouss h i p me n t v ar i a b le s , 1 8 b i n a ry v a r i ab l e s a n d 7 2 c o n -s tr ai nt s. Th e s t ud en t s c an s ol ve th is m od el us in g as p re a ds h ee t -b a se d s ol v er s u ch a s t h e Ex c el S ol v erw i t h o ut f a c i ng c o m p u ta t i o n al p r o b le m s . T he y m a y b ei n fo r me d a b o ut e x is t i ng c o mm e rc i al s o l ve r s ( i nc l ud i n g

the spreadsheet-based com m ercial solvers) that canbe used for m uch larger m odels. We ask the studentst o d is cu ss t he se ns it iv it y o f t he mo de l o ut pu ts t oc h an g es i n i n pu t p a ra m et e rs s u ch a s t h e o p po r tu n it yc o s t p a r a me t e r , b r e w er y c a p ac i t y u t i l iz a t i on , b e e r d e -m a n d , t r a ns p o r t at i o n a n d i n v e s t me n t c o s t s . W e a l s od is cu ss s ou rc es o f u nc er ta in t y s uc h a s h ig h i nf la ti on ,econom ic instability, forecasts, etc. that m ay affect them od e l ou t pu t s. W e a sk t h e st ud e nt s t o i nv es t ig at es e ve r al w h at - if s c en a ri os s u ch a s o p en i ng a nd e xp a nd -i ng t he n ew b re we ry e ar li er t ha n i t is r eq ui re d. W ep o s e t he f o l l ow i n g q u e s t io n f o r t h e se p u r po s e s .

Question 5. W h a t a re t h e e f fe c t s o f t h e p la n n i n g h o r i -z on o n t h e c ap ac it y e xp an s io n m od el ? S pe ci fi ca ll y,d i sc u ss t h e t i me pe r io d o v er wh i ch t h e b r ew e ryo p en i ng a n d e xp a ns i on m a y t a ke p l ac e , t he c o s t s t h ats h o u l d b e c o n s id e r e d i n t h e o b j e c ti v e f u n c t io n a n d t h en u m b er o f y ea r s t h e s e co s t s s h o u l d b e a c co u n t e d f o ri n t h e m o d el .




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Question 6. W i t h 1 0 % o p p o r tu n i t y c o s t , t h e s o l u t io ni s t o o pe n a b re we ry i n I zm ir i n y ea r 2 a nd t o e xp an di t i n y e a r 3. W h a t a r e th e e f fe c t s o f o p en i n g a n d / o r e x -p a n d in g e a r l y? F o r w h a t op p o r t un i t y c o s t o f c a p i ta lv a lu e d o es t h e o pt i ma l s o lu t io n c h an g e s o t h at i t b e -c o me s o p t im a l t o o p en t h e b r ew e ry e a rl y , t h at is , i nyear 1?

Question 7. W h a t pa r t s o f t h e m o d e l i s m o s t pr o n e tou n ce r ta i nt y ? H o w s e ns i t iv e i s t h e s o lu t io n t o c h an g esi n b ee r d e ma nd o f d if fe re nt d i st ri bu to r s? I f e xt ra e ff or t sc o u l d b e ma d e to e s t i m at e s om e po r t i o n o f t h e d a t am or e a c cu r at e ly , w h ic h o f t h e d a ta s h ou ld t h es e e f fo r ts

be spent on?

W e a sk t he st ud en t s t o w or k i n t ea ms . W e u se pa rt so f s o m e c l a s s p e r i o ds f o r t e am w o r k w h e r e t h e i n s t ru c -t o r i s a v a il a b l e f o r c o n s u lt a t i o n. T ea m w o rk h a s a d d i -t io na l ad v an t ag es i n t h e M BA p ro gr am s w he re s t u-d e n ts h a v e d i v er s e b a c kg r o un d s a n d w o r k e x p er i e nc e .E a ch s t u de n t c o nt r ib u t es h i s/ h er e x p er t is e , a nd t h ec a s e w o r k b e c o me s a n i m p o r ta n t l e a r ni n g e x p e ri e n c e,w h er e th e y l e ar n f r o m e a ch o t h er . Af t er s ub m it t in gt he ir c as e r ep or t s, h av in g a t ea m t o p re s en t t h ei r r es ul tsa n d e n co u ra g in g a l l s t ud e n ts t o p a rt i ci p at e i n t h e d i s -c u ss i on a l so c o nt r i bu t e s t o t h e l e ar n in g .

D u r i ng t h e c a s e a n a ly s i s , s o m e s t u d en t s h a v e d i f f ic u l -t i es i n t h e m o de l in g s t ag e a n d t h ei r q u e st i on s c o n ce n -t r a t e o n s e v e r al a s pe c t s o f t h e c a s e .

T he u nd er gr ad ua te s tu de nt s, h av in g s tu di edt r an s s hi p me n t m o de l s w i th a s i n g le c o m m od i t yp r i o r t o t h e c as e a s si g n m en t , n e ed t o s p e n d so m et im e th in ki ng a bo ut h ow t o m od el t he b al an c ec o n s t r ai n t s a t t h e b r e w er i e s . I n t h e c as e a n al y s i s ,m a lt sh i pp e d i n to e a ch b r ew e ry i s p r oc e s se d a n dc o n ve r t ed t o b e er b ef o re it i s s h ip p ed o ut t o t h ed i s t r i bu t i o n c e n t e r s. T h e r ef o r e , t he s t u d e nt s n e e dt o f i g u r e o ut t h a t t h e a m o u nt o f b e e r s h i p pe d o u te q ua ls t h e y i el d o f i n co mi n g m al t . E v en t ua ll y, t h eya l l r e so l ve t h is o n t h e ir o w n w i th s o me t hi n ki n g.

S om e u nd er gr ad ua te an d M BA s tu de nt s f in d i td i f f i cu l t t o m o d e l t h e f ix e d c os t s o f o p en i n g a n e w

brewery and expanding an existing brewery, to-g et h er w it h t h e a nn ua l d is t ri bu ti on c os t s i n t h eo bj ec t iv e f un c ti on . A lt ho u gh t he s t ud en t s a reg ui de d b y h in ts i n t he ca se , t he y t yp ic al ly h av eq u es t io ns o n h ow t o c h oo se t h e p l an n in g h or iz ona n d h ow t o d i sc o u nt t h e f u tu r e c os t s . Th i s p a rt o ft he a na ly si s r eq ui re s t he s tu de nt s t o u se t he ir

knowledge from other courses, possibly the Engi-n e er i ng E c o no m ic s o r C o s t A c c o un t in g c o ur s e s.

S om e s t ud en t s f or ge t t o r el at e t he b in ar y d e ci si onv ar ia b le s u s ed t o m od e l t h e f ix ed c o st s t o s h ip me ntv a r i ab l e s b y c o n s t r ai n t s . H o w e v er , s u c h m i s t ak e sc a n b e e as i l y c a u g h t a n d c or r e c t ed b y t h e s t ud e n t s

w h en t h e y s e e t h e i n co n s is t en c ie s i n t h e o u t pu t s.W e r em i n d t h e st u d e n t s a b o u t t h i s i n t h e ca s e di a -l og ue s b y p oi nt in g o ut t ha t th er e is n o f re e lu nc ha n d t h e b r ew e r i es c a n n o t b e us e d u n l es s t h e f i x edc os t s a re in cu rr ed in t h e o bj ec t iv e f un ct io n.T h r o u gh t h e c a s e d i al o g u es , w e w a r n t h e s t u d e n tsa b ou t t h e a d d it i o na l c o ns t r ai n ts t h e y n e ed t o f o r-m u l a te t o m a k e su r e t h at t h e mo d e l s o lu t i o n w i l ln o t e x pa n d a br e we r y t h at h as n o t b e en o p en e dyet.

W e p ro vi de g ui de li ne s a nd h in t s t o t h e s tu d en ts

t hr ou gh t he d ia lo gu es i n t he c as e o n h ow t he y m aya p pr o ac h d i ff e re n t pa r ts o f t he p r ob l em a nd h o w t os e tu p t h e l i ne a r p r og r am m in g a n d m i xe d in t eg e rp ro g ra mm in g m od e ls . T he d ia lo gu es a ls o s e rv e toh i g h li g h t t h e d e c i s io n m a k in g p r o c e s s f r o m d i f f e re n tf u n c t io n a l p e r sp e c t i ve s o f m a r k e t in g a n d o p e r at i o n s .

5.2. Student FeedbackThe students, in general, find the context of the prob-l e m i n te r es t in g . Th i s c a n b e ut i li z ed t o c a pt u r e s t u-d en ts ' a tt en ti on w he n d is cu ss in g t he c as e i n c la ss .S t ud e n ts t e nd t o b e v e ry r e s po n s iv e t o b e er t r i vi a a n da n e c d ot e s . F o r e x a m pl e , w e r a i s e q u e s t io n s s u c h a s" Wh o d r in ks t h e m os t be er ?" o r "H o w l on g h av e we

been drinking beer?" and provide inform ation onw h ic h c o un t r y h a s t h e l ar g es t a n nu a l an d p e r ca p it a

beer consum ption, the history of beer m aking, as wella s t h e be e r pr o du c t io n p r oc e ss . S uc h a c ti v it i es h e lp t oi m p ro v e c l a s s p a r t i ci p a t io n a n d s t u d e n t m ot i v a t io n .

S t u d e nt s e s p e c ia l l y l i k e t h e fa c t th a t t he c as e is b a s e do n a r ea l l if e p ro bl em . T he y g et s at is fa ct io n f ro m b ei nga bl e t o o b ta in m e an i ng f ul s o lu t io n s u s in g q u an t it a ti v e

m e th o d s t o s u c h a r e la t iv e ly c o m pl e x p r o bl e m. D e s pi t et h e h a rd w o rk r e qu ir e d, t h e s t ud e nt r e sp o ns e h a s b e eno v e r wh e l m in g l y p o s i t iv e i n a l l t he o c c as i o n s w e u s edt h e c a s e . W e us e d su r v e y s t o o b t a i n s t u d e n t f e e d b ac ki n t w o o c ca s io n s. A t t h e H e ls i nk i S c ho o l o f E c on o mi c s,after the use of the case at an MBA course we obtained3 1 p o s i ti v e f e e db a c k o u t o f 3 3 s t u d e nt s ; 2 s t u d e n t sfound the case analysis difficult. One of the students,D av e M as o n, M B A c la ss o f 2 00 3, H S E m ad e t h e f ol lo w -i ng r e ma rk : " Al l r o un d a n e xc el le nt a nd f u n c as e w hi ch




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builds from a basic m odel into a m ore com plex one,t ha t g iv es a n i de a o f a r ea l l if e s it ua ti on ." A t t he P ur du eUniversity, after the use of the case for a required un-dergraduate Managem ent Science course, 95% of thes t u d e n ts f o u n d t h e c a s e m at e r i al t o b e w e l l -p r e p ar e d ;8 6% f ou nd t he c as e i nt er es t in g; 8 2% f ou nd t h e r eq ui re da n al y si s c h al l en g in g b u t n o t to o d i ff i cu l t; 7 5% f o un d

the case assignm ent a useful experience, where ther e ma i ni n g 2 5 % w e re u n d ec i de d , e x ce p t f o r o n e s t u de n tw h o c o m m e nt e d t h a t t h e c a s e h a d m a d e h i m t h ir s t y .A f t e r al l , w h at w o u l d b e mo r e s u i ti n g t h a n a c o m p li -m e n t ar y c a s e o f b ee r i n t h e c l a ss r o o m w hi l e s t u d yi n ga c a se o n b e er ?

Appendix

C as e S tu d y o f L oc at io n, D is tr ib u ti on , a nd

Capacity Expansion Decisions at AnadoluEfesEditor's Note: T he c as e i n t h is a pp en d ix c an n ot b ed is t ri bu te d t o s t ud en t s. T h i s c as e i s c ur re nt ly u nd err ev ie w b y I NF OR MS C as es a nd T ea ch in g M at er ia lsI n i t i at i v e f o r d i s t r ib u t i o n . C o n ta c t T o m G r o s s m an (ta grossm [email protected] ) t o f i nd o ut t h e s t a tu s o f th i sc a s e f o r i n -c l a s s u s e .

1. IntroductionA n ad o l u E f es h a s d o mi n at e d t h e T u r k is h b e er m a r k et

i n t h e la s t t wo d e ca d es a s a r e su l t of c a re f ul p l an n in ga n d s u c ce s sf u l s t r at e g ie s i n d i s tr i bu t io n , p r i ci n g a n dm a rk e ti n g. C o ns e q ue n tl y , E f e s h a s b e co m e s y n on y -m o us w i th b e er in T u rk e y a n d h a s r e ac h ed an i m pr e s -sive 78% m arket share in 2000 (Exhibit 1). The com pa-n y h as a ls o e xt en de d i ts b us in es s l in e b y b uy in g t her i gh t t o b o t tl e C o ca - Co l a i n T u rk e y i n 1 9 98 , a n d h a s

been transform ing into a m ultinational identity bybuilding up international brewing operations m ostlyi n E a st e r n E u ro p e, R u s s ia a n d C en t r al A s i a. T h e t wom ai n c ha ll en ge s f ac ed b y t he c om pa ny i n t he n ewm i ll e nn i um a r e t o s u cc e ed i n i t s b u si n es s d i ve r si f ic a -t io n e ff or ts a nd t o m ai nt ai n i ts m ar ke t p os it io n i n i tsc o re T u rk i sh b r ew i ng b u si n es s .

E m re Y am a n, w h o w a s h i re d a s t h e Ch i ef E x ec u ti v eO f fi c er o f E f es n e ar l y o n e y e ar a go , h as a c ou p le o fm aj or is su es i n m in d as h e sh ap es t h e b us in e ss p la no f t he c o mp an y f or t h e ye ar s t o c om e. I n t er ms o f d o-m es t ic o p er a ti o ns , a n i mm ed i at e i s su e i s t h at t h e a n ti c -i p a t ed i n c r e a s e i n b e e r d e m an d w i l l s u r p as s E f e s ' t o t a l

p r od u ct i on c a pa c it y i n a c o up l e of y e ar s . A c ap a ci t ye xp an s io n p la n h a s t o b e p r ep ar e d c ar e fu ll y t o a d dr e sst hi s p ro bl em . Su ch a pl an w il l al so p ro ve u se fu l tod e te r a n y f o re i gn e n t ri e s t o t h e a t t ra c ti v e T u rk i sh b e erm ar ke t. In f ac t , i nc re as in g c o mp et it io n i s t h e o th erm a j o r i s s u e i n E m r e Y a m an ' s a g e n d a. H e h a s a l r e ad ys e en t h e fi r st s i gn s o f p re s su r e wh e n E f es ' m ai n c o m-

p et it or T ur k T ub or g w as a cq ui re d b y t he D an is hCarlsberg Breweries in September 2001 and subsequent-l y l a un c he d t h e " C ar l sb e rg " b r an d ed b e er a g ai n st E f es 'o w n " M i l le r Ge n u i ne D ra f t " . A l t h o ug h E m r e k n o w st h at E f e s' l o n g- t im e b ra n d " Ef e s P i ls e n" h a s a v e ryl o y a l c u s t o m er b a s e, h e b el i e v es t h a t t h e s t r e n g t h o fE f es ' p r od u c ti o n- d is t r ib u ti o n n e tw o rk w i ll p l ay a k e yr o l e in t h e c o m pe t i t i on .

E mr e Y am an m en ti on s s om e o f h is c on ce rn s t o A liY u r t o gl u , t h e V i c e P r e s i de n t f o r L o g i s t i c s a n d D e f n eKutay, the Vice President for Marketing over a gam eo f g o lf b y t h e B o s ph o r u s .

Emre Yaman (CEO): " T h e l a t e s t f i g u re s i n t h e a n n u a la c t i vi t y r e p o r t s h o w t h a t o u r d i s t r i bu t i o n c o s t s c o n s t i -t u t e ab o u t 25 % o f ou r c o s t o f g o o d s s o l d . I w o n d e r i fw e c an d o b et t er . "

Ali Yurtoglu (Vice President for Logistics): "I havea ls o b ee n l oo k in g i nt o t h is r ec en t ly a nd a ss ig ne d ou rn e w e m pl o ye e S e li n B a yd a r t o a n al y ze o u r d i s tr i bu t io ns y st e m. S h e t h in k s t h at t h er e i s r o om f o r c o st r e du ct i on

if we optim ize our m alt and beer shipm ent plan."

Defne Kutay (Vice President for Marketing): "If wea i m t o l o w e r c o s t s , w e m ay h a v e t o c o m p ro m i s e f r o mt h e e f f ic i e n c y o f o u r s u pp l y c h a i n . Ou r b r e we r i e s m a y

be reluctant to dam age the loyalties that they havew o rk e d h a rd t o d e ve l op . A n ka r a b r ew e ry h a s b e ens u p p ly i n g a l l t h e b ee r f o r t h e d i s t r ib u t o r i n B u r s a a n dI s t an b ul b r ew e ry h a s b e en s u pp l yi n g a l l th e d em a ndo f t he d i st r ib u to r i n A n t al y a f o r a lo n g t i me . B ot h o ft h e s e b r e w er i e s a n d d i s t r i bu t o r s h a v e b u i l t s t r o n g r e -l a t i on s h i p s a n d wo u l d p r e f er t o k e e p t h e ex i s t i ng r e l a -

tionships."

Emre: " W h y d o n ' t w e f i r s t l o o k i n t o t h e p o t e n t ia l s a v -i n gs a n d de c id e l at e r wh e th e r it i s w o rt h m a ki n g a n ychanges."

Ali: " A c t u al l y , w e al r e a d y h a v e m o st o f t h e d a t a t om a ke t h i s a n al y si s . W e h av e e s ti m at e s o f t h e c os t s o fm a lt a n d b e er s h i pm e nt s b e tw e en v a ri o us l o ca t io n s.


mailto:[email protected]://ite.pubs.informs.org/http://ite.pubs.informs.org/mailto:[email protected]


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W e k no w a l l m a lt p l an t a nd b r ew e ry c a pa c it i es a n dc a n o b t a i n p r o j e ct e d b ee r d e ma n d f ig u r e s f o r t h e n e x tyear."

Emre: " T h a t s o u n d s g r e a t . O n c e y o u o b t a i n t h e re s u l t so f t h e a n al y si s , w e c a n m e et a nd d ec i de on h o w t oproceed."

Emre Yaman (CEO): " T h e l a t e s t f i g u re s i n t h e a n n u ala c t i vi t y r e p o rt s h o w t h a t o u r d i s t r i bu t i o n c o s t s c o n s t i -t u t e ab o u t 25 % o f ou r c o s t o f g o o d s s o l d . I w o n d e r i fw e c an d o b et t er . "

Ali Yurtoglu (Vice President for Logistics): "I havea ls o b ee n l oo k in g i nt o t h is r ec en t ly a nd a ss ig ne d ou rn e w e m pl o ye e S e li n B a yd a r t o a n al y ze o u r d i s tr i bu t i ons y st e m. S h e t h in k s t h at t h er e i s r o om f o r c o st r e du ct i onif we optim ize our m alt and beer shipm ent plan. "

D e f ne K u t ay ( V i c e P re s i d en t f o r M a rk e t i ng ) : "If wea i m t o l o w e r c o s t s , we m a y h a v e t o c o m p r om i s e f r o mt h e e f f ic i e n c y o f o u r s u pp l y c h a i n . Ou r b r e we r i e s m a y

be reluctant to dam age the loyalties that they havew o rk e d h a rd t o d e ve l op . A n k ar a b r ew e ry h a s b e ens u p p ly i n g a l l t h e b ee r f o r t h e d i s t r ib u t o r i n B u r s a a n dI s t an b ul b r ew e ry h a s b e en s u pp l yi n g a l l t h e de m an do f t he d i st r ib u to r i n A n t al y a f o r a lo n g t i me . B ot h o ft h e s e b r e w er i e s a n d d i s t r i bu t o r s h a v e b u i l t s t r o n g r e -l a t i on s h i p s a n d wo u l d p r e f er t o k e e p t h e ex i s t i ng r e l a-tionships."

Emre: " W h y d o n ' t w e f i r s t l o o k i n t o t h e p o t e n t ia l s a v -i n gs a n d de c id e l at e r wh e th e r it i s w o rt h m a ki n g a n ychanges."

Ali: " A c t u al l y , w e al r e a d y h a v e m o st o f t h e d a t a t om a ke t h i s a n al y si s . W e h av e e s ti m at e s o f t h e c os t s o fm a lt a n d b e er s h i pm e nt s b e tw e en v a ri o us l o ca t io n s.W e k no w a l l m a lt p l an t a nd b r ew e ry c a pa c it i es a n dc a n o b t a i n p r o j e ct e d b ee r d e ma n d f ig u r e s f o r t h e n e x tyear."

Emre: " T h a t s o u n d s g r e a t . O n c e y o u o b t a i n t h e re s u l t so f t h e a n al y si s , w e c a n m e et a nd d ec i de on h o w t oproceed."

2 . C o m p a ny B a c k g ro u n dE fe s B ev er ag e G ro up i s t h e l ar ge st b us in es s u ni t ofA na d ol u H o ld i ng , w hi ch w as f o un d ed i n 1 96 9 i n I s ta n-

bul and nam ed after the Turkish peninsula Anatolia.T h e t w o f o un d in g f a mi l ie s w h o s t i ll ho l d 5 5 % o f t h e

s h a r es c o n t r o l t h e h o l d in g . T h e r em a i n in g 4 5 % o f th es h ar e s a r e t ra d ed o n t h e I st a n bu l S t oc k E x ch a ng e . I na d di t io n t o t h e b ev e ra g e s ec t o r, A n a do l u h a s d i ve r si -f i e d i n t e re s t s i n t h e a u t o m o ti v e , o f f ic e s u p p l ie s , p a c k -a gi n g a nd f i na n ci al s e ct o rs a n d h a s j o in t v e nt u re s w it hi n t e r na t i o n al c o m pa n i e s s u c h a s H o n d a , Is u z u , It o c h uand Faber-Castell.

T h e p ri n c i pa l a ct i v i t ie s o f E f e s B e v e r ag e G r ou p a r e int h e pr o d uc t io n a n d d is t r ib u ti o n o f m al t , be e r an dp l a s ti c c r a t e s. B e e r s a l e s a c c o u nt e d f o r 9 6 % o f 2 0 00g r os s r e ve n ue s ; t h e r em a in i ng 4 % c a me f r o m m al t ,p l a s ti c s a n d o t h e r . E f e s B e v e r ag e G r o u p o p e r a te s n i n e

breweries and four m alteries in five countries and alsoc o nd u ct s C o c a- C o la o pe r at i on s i n f i ve C IS c o un t r ie s .E fe s B ev er ag e Gr ou p, t og et he r wi th i ts p ar en t,A n a d o lu H o l d i n g, i s t h e l ar g e s t l o c a l s h a r e ho l d e r i nt h e Tu r k i s h C o c a - C ol a f r a n c hi s e , c o n t r o ll i n g 4 0 % o ft h e s ha r e s . I n J u n e 20 0 0 , t h e p ro d u c t io n c o m p an i e s o fE fe s B ev er ag e G ro up m er ge d in t o a si ng le en t it y:

Anadolu Efes Brewery and Malt Industry Corporation.A c co r d in g t o F i na n s in v es t R e s ea r ch G r ou p o f I s t an b u l,the value of Anadolu E fes was $1.143 m illion inN o ve m be r 20 0 1. A s o f Ma y 2 0 02 , th e co m pa n y w a st h e e i gh t h l a rg e st T u rk i sh c o mp an y b y m a rk e t c a pi t al -ization.

E f es h a s a n a n nu al b ee r p r od u ct i on c a pa c it y o f a ro u nd1 . 4 b i ll i on l i te r s. T he c om p an y o w ns f i ve b re w er i esa n d tw o m a lt p l an t s i n T u rk e y. T h e do m es t ic p l an t s

h av e a n a nn u al t o ta l p ro d uc ti on c ap ac it y o f 9 10 m il li onl i t e rs o f b e e r a n d 9 7 ,5 0 0 t o ns o f m a lt . T h e m ar k e t i nga n d d is t r ib u ti o n c o mp a ny o f t h e g r ou p i s r e sp o ns i bl ef o r t h e d i r e ct d i s t r i bu t i o n o f E f e s P i l se n , E fe s L i g h t, E f esDark, Efes Extra, Everest, Miller and Beck's p ro d uc ts i ns ix m ai n r eg io n s o f T ur k ey , a nd w or k s t h ro ug h d is t ri b-u to rs i n 3 00 d is tr ic ts . I n 2 00 0, E fe s' s ha re i n t he T ur ki sh

beer m arket has reached a record high of 78%. TurkT u bo r g i s i t s o n ly s i gn i fi c an t c o mp e ti t or ( E x hi b it 2 ) .T h e t h ir d p l a y er i n t h e m a rk e t i s t h e s t a t e mo n o p o ly ,T e k e l w i t h n e a r ly 1 % s h a r e . I m p o r te d h i g h p r e m iu m

brands do not even constitute 1% of the m arket.

Efes sells it s pro duct s in m ore than 30 count riesw o rl d wi d e ( E xh i bi t 3 ) . W h il e a f e w s h ip p in g c o n ta i ne r sm ak e th ei r wa y t o t h e U .S . ev er y y ea r, E fe s h as s ee no u ts t an d i ng c o ns u me r r es p on s e in R u ss i a, E a s te r nEurope, the Caucasus and Central Asia. The com panyh as b ee n a ct iv e i n t he se m ar ke ts v ia i ts s ub si di ar y E fe sB re we ri es I n te rn at io na l a ft er t h e c o ns t ru ct io n o f

breweries in the Rom anian city of Ploiesti and Moscow,




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a nd t h e a cq u is it io n o f b re we ri es i n K az ak hs t an a ndU k r a in e i n l a t e 1 9 9 0s . T h e s a l e s v o l u me o f E f es B r ew -e r i es I n t e rn a t i o na l a l m o st t r i p l ed i n 2 0 0 0, d u r i n g w h i c ht h e M o s co w b r ew e ry b e ca m e f u ll y o p er a ti o na l , a n dh as i nc re as ed i ts s al es v ol um e t o 2 3% o f t ot al b ee r s al eso f t h e E f e s B e v e r ag e G r o u p.

3. Turkish Beer MarketT ur ki sh b ee r m ar ke t h as a s iz e o f 7 30 m il li on l it er s a nda ro un d $ 29 4 m il li on s al es v al ue , a cc or di ng t o a 2 00 1r e po r t b y F i n an s i nv e s t R e s ea r c h G r o up(3). F i n an s i nv e stp o in t e d ou t t h e po t e nt i al f o r g ro w th i n t h e m ar k etc o n s i d er i n g t h a t a n a n n u al p op u l a ti o n g r o w t h o f 1. 2 %i s e x p e ct e d a n d a r o u nd 5 0 % o f t h e c u r r e nt p o p u l at i o no f 6 5. 7 m il l io n p e op l e is b e lo w t h e a ge o f 2 5(4 ).

T u rk e y i n cr e as e d it s b e er i n ta k e by m o re t h an 5 0 % toa l e ve l o f 1 6. 8 l i t er s p e r p er s o n f r o m 19 9 5 t o 2 0 0 0 . D e -

s p it e t h is e x ce p ti o na l g r ow t h, t h e p e r c ap i ta c o ns u mp -t i o n i s b e l o w t h e g l o ba l a v er a g e o f 2 2 . 7 l i t e r s(5 ). Turkeyr an ks a s t he t en t h l ar g es t b ee r- co ns um in g n at io n i nE u r o p e d e s p i t e i t s r e l a ti v e l y l o w p e r c ap i t a co n s u m p-t i o n . T h e n a t i o n o f 65 . 7 m i l l io n p e o p le im b i b ed mo r et h an 1 . 1 b i ll i on l i te r s o f b e er i n 2 0 00 , a bo u t o ne - ei g ht ho f w ha t l ea di ng G er ma ny 's 8 2. 8 m il li on r es id e nt sconsum ed.

B ee r co ns um pt io n i s c lo s el y r el at ed t o c ul tu ra l a ndd e m o g ra p h i c f ac t o r s . S u rv e y s i n d i c at e t h a t a r o u n d4 8 % o f t h e a d u l t p o p u la t i o n i n T u r k e y c o n s u me s a l c o -

h o li c b e ve r ag e s, a n d a r ou n d 4 2 % p e rc e nt o f t h os e w h od o n o t d r in k s t a te th a t t h e ir re l ig i ou s b e li e fs a r e t h em ai n r e as o n f o r a bs t ai n in g . A lt h ou g h b e in g a p r ed o m-i n an t ly M u sl im n a ti o n, T u rk e y h a s b e en a s e cu la r s t at es i n c e t h e e s t a bl i s h m en t o f t h e R e p u b l i c i n 1 9 2 3 a n dt he Tu rk is h g ov er nm en t im po s es n o r es tr ic ti on s o na l c o ho l c o n s u m p t io n . H o w e v e r , t h e T u r k i s h g o v e r n -m e n t b an n e d b r oa d c a s t ad v e r t is i n g f o r a l l a l c o h olp ro d uc t s i n 1 99 5, f o rc i ng E f es t o r et h in k i t s a dv e rt i si n gs t ra t eg y . S i nc e t h en , E f es h a s p a rt i cu l ar l y i n cr e as e d i t ss p on s o rs h ip o f sp o rt i ng e v en t s , c o nc e rt s a n d i t s o w nsuccessful professional basketball team .

4 . T r e n d s i n t h e G l o b a l B r e wi n g I n d u s tr yW o rl d b e er c o n su m pt i o n w a s e x pe c t ed t o b e a r ou n d1 2 6 b i l l io n l i t e rs i n 2 0 0 0. U SA an d C h in a ac c o u n t f o r3 6% o f t h e g lo ba l b ee r m ar ke t , w hi le e me rg in g m ar k et s

m a k e u p a s i g n if i c a n t 4 5 % . C on s u m p ti o n i n e m e r g in gm ar ke ts h as b ee n g ro wi ng a s d r in ki ng c ul tu re s o f t h ep o pu l at i o ns c h an g e. Ma j or US a n d E u ro p e b a se d

brewers have been focusing on the Eastern Europe,C h in a a n d t h e C I S c o un t ri e s f o r g r ow t h o p po r tu n it i es .I n p a rt i cu l ar , C a rl s be r g h a s b e co m e m o re ac t iv e i nEastern E uro pean markets and T urkey recent ly.

H e in e ke n h as s i gn i fi ca n t s t ak e s i n a n u mb e r o f E a st e rnE u ro p ea n b r ew e rs b u t n o t w i th t h e T u rk i sh c o mp a ni e s.

4 . 1 . P a rt I : I m p ro v i n g t h e C u r re n t P r od u c t i onand Distribution SystemB e er i s p ro d uc e d b y m al t in g b a rl ey , b re w in g , d is t il li n ga n d b o t t l i n g. T h e b e e r p r o d u ct i o n p r o c e ss , d e s c r i b e di n E xh ib it 4 , h as b ee n g oi ng o n i n A na to li a f or t ho u-s an d s o f y ea rs ( E xh ib it 5 ), a nd h as r em ai ne d e s se nt i al lyu nc ha ng ed t o o ur d ay ; n ow t ak in g p la ce a t t he m od er nm a lt p la n ts a n d b r ew e ri e s. E fe s h a s t w o m a lt p la n ts ,

both located close to m ain barley regions in Konyaa n d A f y o n ( F i g u re 1 ) . M a l t p r o d u c e d a t t h e s e p l a n t s,o r i m p o rt e d a t t h e I z m i r h ar b o r i s t r a n s po r t e d t o E f e s '

breweries in Istanbul and Ankara. Efes ships beerp ro d uc ed a t t h e b re we ri es t o i ts m ai n d is t ri bu t io nc e nt e rs i n I s ta n bu l , I z mi r , A n ta ly a , B u rs a , K a ys e ri a n dt o t h e I z m ir h a r b o r fo r e x p o rt .

T h e es t im a te s o n t h e t ra n sp o rt a ti o n c o st s b e tw e en t h em al t pl an t s a nd t h e br ew er ie s; a n d be tw ee n t h e

breweries and the distribution centers are given inExhibit 6. Exhibit 7 contains the beer dem and forecast

a t t h e d i s t r ib u t i o n c e n t e rs f o r t h e n e x t t h re e y e ar s a n dExhibit 8 shows the current m alt and beer productionc a p ac i t i e s a s w e l l a s t h e m al t y i el d . E xh i b i t 9 s u m ma -r i ze s t h e c u rr e nt d is t r ib u ti o n p l an p r ep a re d fo r th enext year.

H a vi n g s o lv e d a l in e ar p r o gr a mm i ng m o d el t o o p t i-m i ze t h e p r o d uc t io n a n d d i st r ib u ti o n s y st e m, S e l inB a y d a r e x p l ai n s t h e r es u l t s t o h e r s u pe r v i s or A l i Y u r -t o gl u . "I u s ed t h e m o d el t o f i gu r e o u t ho w m a ny t o n so f ma lt t o s hi p f ro m e ac h m al t pl an t t o e ac h b re we rya nd h o w m uc h b ee r t o s h ip f ro m e ac h b re we ry t o e ac hd i st r ib u to r . I a ls o m ad e s u re t h at n o ne o f t h e c ap ac i ti eso f t h e m al t p l a nt s o r b r e we r i e s i s e x c e e de d , a n d al l t h e

beer dem and of the distributors is satisfied. The ship-m e nt p l a n t h at m i n i mi z es t o t al c o s t s i s q u it e d i f fe r en tf r o m t he c u r r e nt p l a n b u t w e c an s a v e a ro u n d 1 0% i n

(3) http:/ / www.fi nansi nvest.com/(4) B e e r is m o s tl y p r e f er r e d by t h e y o un g e r ge n e r at i o n d u e t o i t s p r i ce a n d a va i l ab i l it y .(5) A c c or d i ng t o t h e r ep o r t ti t l ed " R e c en t D e v el o p me n t s i n T u r ke y ' s B e e r Ma r k et " b y J o h n G . R o dw a n , d a t ed 3 / 1 5/ 2 00 2 .


http://www.finansinvest.com/http://ite.pubs.informs.org/http://ite.pubs.informs.org/http://www.finansinvest.com/


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o u r tr a ns p or t at i on c o s ts . " Al i i s c o nt e n t wi t h t h e r e-s u lt s . " Gr e at , f or s u ch s i ze a bl e s av i ng s w e m ay c o n -v i n c e D e f n e a n d E mr e t h at i t i s w o r t h t h e e ff o r t fo rc h an g in g a f e w o f t h e es t ab l is h e d re l at i o ns i n t h e d is -t r i b ut i o n n e t w o rk . "

S e li n B a yd a r is e x ci t ed a b o ut t h e u pc o mi n g m e et i ng

w i t h E m r e Y a ma n , D e f n e K ut a y , a n d A l i Y u rt o g l u ,w h er e s he p r es e nt s t h e re s ul t s o f h er a n al y si s o f t h ed i s t r ib u t i o n s y s t e m .

Emre: " I ' m i mp r es s e d b y S e li n 's f i nd i ng s o n t h e d i s tr i -bution plan, but to what extent can we im plem entthem ?"

Defne: " We w il l ne ed t o w or k p ro ac ti ve ly w it h t hed i s t r ib u t o r s . W e n ee d t o e x p l ai n t h e m h o w a l l p a r t ie si n t h e s u pp l y c h ai n w i ll e v en t ua l ly b e ne f it f r om p u ll i ngt h e c o st s d o wn . W e s h ou l d a l so g o i n t h e d i re c ti o n o fs tr ea ml in in g t h e i nf or ma ti on f lo w e le ct ro n ic al ly t oe n a b le s t ro n g e r s u p p ly c h a i n c o l l ab o r a t io n . Wh e n w ef i r s t b e g i n t o i m p l em e n t t h e ch a n g e s, w e m a y l a u n cha p r o mo t i on c a mp a ig n t o k e ep t h e d i s tr i bu t o rs h a pp y . "

Emre: " L e t u s a i m t o i m p l em e n t t h e o p t i m al d i s t r ib u -t i on p la n , a n d r e so l ve t h e i ni t ia l p r ob le m s w it h in t h re em onths."

F i gu r e 1 : P i ct u re L o ca t io n o f E f es ' F a c il i ti e s.

4 . 2 . P a r t I I : C a p a c i t y E x p a n si o n D e c i s i on sE mr e Y am an h as a bi gg er pr oj ec t in h is ag en da:o p en i ng n e w b r ew e ri e s.

Emre: " At t hi s p oi nt w e ne ed t o f oc us o n k ee pi ng o urm a r k et s h a r e in r e s p o ns e t o d e m a n d gr o w t h . Ou r d e -m and forecasts indicate we will need m ore brewingc a pa c it y s o o n. W e c a nn o t e x pa n d t h e c u rr e nt b r ew e ri e sa ny m or e an d wi ll h av e to o pe n a n ew b re we ry a ft er

t h e n e x t y e ar . T h e M a n uf a c t u ri n g D e p a rt m e n t h a sd o n e s o m e r e s e a rc h o n t h i s . T h e n e w b r e w er y w i l l u s et h e l a t e st t e c h n o l o gy a n d w i l l h av e a n i n i t ia l c a p ac i t yo f 7 0 m il l i o n l i t e r s p e r y e ar . W e c a n e x p a nd t h e c a p ac -i ty a t th e ne w b re we ry t o 1 20 m il li on l it er s p er y ea ra n y t i m e w e l i k e q ui t e i n e x pe n s i v el y . W e w i l l m o stl i ke l y b o r ro w m o ne y f o r al l t he i n ve s t me n ts . I e x pe c t

t h is t o c o s t u s a r ou n d 1 0 % i n i n te r es t a nn u al l y. "

Selin: " Do y o u h av e p os s ib le l o ca ti on s i n m in d? T h el o ca t io n o f t he n e w b r ew e ry m a y m a ke a h ug e d if f er -e n ce i n t e rm s o f o u r t ra n sp o rt a t io n c o st s . "

Emre: "You're right. Our technical staff looked at sev-e r al f a ct o r s t o d e t er m in e p o s si b le l o c at i o ns . T h e p r im a -r y f ac to r w as t o h av e a go o d q ua li ty w at e r s o ur ce .T h ey h a ve a ls o c o ns i de r ed b e er d e ma n d c o nc e nt r at i on sa n d p ro x im i ty t o m a lt p l a nt s . T h ey s u gg e st e d I z mi r ,Sakarya and Adana, and estim ated the costs of build-i ng a nd e xp an d in g p la nt s i n e ac h o f t h es e l oc at io ns(Exhibit 10)."

Selin: " G re a t, w e c a n u s e t he s e c os t f i gu r es t o b u il d am athem atical m odel and find the decisions that yieldt he mi ni mu m c o st . We ma y t he n d o s om e w ha t- ifa n al y si s t o s e e i f t h e r e su l ts a r e s e n si t iv e t o t h e c o stestim ates."

Emre: " Y ou m an a ge d t o o p ti mi z e t h e d i st r ib u ti o n p la nv e r y q u i c k ly . W o u l d i t b e p o s s ib l e t o f i n d a m i n i mu m -

c os t s o lu ti on t o t h is p ro bl em a s w el l? "

Selin: " I n t h i s c a s e w e ha v e a f u nd a m e n ta l l y d i f f e re n ta sp ec t t h at m ak es t h e p ro bl em m or e c o mp le x. W e n ee dt o d ec id e wh et he r o r no t to o pe n a ne w b re we ry i ne a ch o f th e lo c at i on s a n d w h et h er o r n o t t o e x pa n de a ch . It wi l l b e i n te r es t in g t o w o rk o n t h is . "

Ali: " We m ay decide also when to open the newbrewery. I understand that we cannot delay openingi t mo r e t h an t wo y ea rs i f we d on 't w an t to l os e ou rm ar ke t s ha re , bu t i s i t an o pt io n t o o pe n t h e br ew er y

n e xt y e ar ? S i mi l ar l y, w e c a n c o n si d e r e a rl y e x pa n s io n . "

Defne: " Wh y w ou ld w e wa nt t o o pe n i t a ye ar i n a d-v a n c e o f o ur n e ed ? W e w o u l d b e ty i n g u p m i l li o n s o fdollars."

Selin: " B y o pe ni ng a n ew b re we ry , w e m ay s t ar t s av in gi n t r an s po r t at i on c o st s . "




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Emre: " T he n , t h e q u e st i on i s w h et h e r t h e s a vi n gs i nt ra ns po rt at io n c os t s o ff s et o ur c os t o f o pe ni ng t h e

brewery early. As m uch as I would like to continuet h is d i sc u ss i on , I n e ed t o g o p r ep a re fo r m y T V i n t er -v i ew . I w i ll b e e x p ec t in g t h e r e su l ts o f y o u r a na l ys i s. "

A s S el in a nd Al i w al k b ac k t o t he L og is ti cs D ep ar t-

m en t , t h ey s t ar t p l an n in g t h ei r n e xt a s si g nm en t . W h enS el in p oi nt s o u t t h at t h e f ix ed c os t s o f op en in g a nde x pa n di n g t h e br e we r ie s a r e o n e- t im e co s t s a n d t h e

benefits of these are realized over the years in reducedt r a n s po r t a t io n c o s t s , A l i r e s p o nd s " W e c a n a d d u p t h ep r e s en t v a lu e o f a l l co s t s o v e r th e n e xt 2 0 y e a r s i n t h eo b j e ct i v e f u n ct i o n . A s t h e f u t u r e c os t s a r e d i s c o un t e d ,a n y b e n ef i t s f r o m r e d uc e d t r a ns p o rt a t io n c o s t s b e yo n d2 0 y e ar s w i ll b e u n s ig n if i ca n t. " S e li n s u g ge s ts t o o p ti -m i z e th e s h i p me n t a n d n ew b r e w er y l o c a t io n / e x pa n -s i on d e ci s io n s f o r t h e n ex t t h r ee y e a rs , a n d t o u s e t h et hi rd y e ar d i st ri bu t io n p la n t o e st im at e t he f ut u reshipm ent costs.

Ali: " I d on 't th in k w e c ou ld go m uc h f ar th er th an 3y e a r s f o r d e t ai l e d p la n n i n g a n y w ay . T h e re w o u l d bet oo m uc h u nc er t ai nt y i n t h e c os t a nd de ma nd es t i-m ates."

Selin: " L et 's k ee p i n m in d o ur as su mp ti on s a nd th ei m pl i ca t io n s o f u n de r /o v er - es t i ma t in g t h e c o s ts . I g u es sw e w il l a ls o a s su m e th a t we w i ll c a rr y n o i n ve n to r ya t t he e n d of e a ch y e ar . I e x pe c t t o r e fi n e th e se i d ea s

w h en w e a c tu a ll y s t ar t wo r ki n g o n t h e m o d el . "

S e li n c o n ti n ue s t o d e sc r ib e t h e mo d e l to A l i wh i le t h et wo s ip t h ei r a ft e rn oo n t e a a t t h e L o gi st ic s D ep ar t me nt :" T he d e ci s io n v ar i ab l es w i ll c o mp r is e t h e 0 - 1 v a ri a bl esa nd t h e t r an s po r ta t io n v ar i ab le s . F o r e a ch l o ca t io n a ndyear com bination, there will be a 0-1 variable showingw h et h er a b r ew e ry i s o p en e d, a n d a n ot h er 0 - 1 v a ri ab l es ho wi ng w he t he r a b re we ry i s e xp an d ed . W e a ls o n ee dm a l t a n d be e r tr a n s p or t a t i o n v a r i ab l e s j u s t li k e in t h ep r e v io u s m o d e l , b u t t h is t i m e we w i ll d e f in e o n e s e to f s u ch v a ri a bl e s f o r e ac h y e ar . T h e mo d e l wi l l ha v e

t h e r e g u l ar s up p l y - de m a n d r e s t r ic t i o n s b e t w e en t h em alt plants, breweries and the distributors. The onlyt ri ck h er e i s i n d ef in in g t h e c ap ac it y o f t h e n ew b re w-e r y a t t h e p o t e n t ia l s i t e s . W e s h ou l d m a k e s u re t h a tt h e m od e l i nc ur s t h e f ix ed c o st i n t h e o bj ec t iv e f un c ti oni f i t w an t s t o u s e t he c a pa c it y .

Ali: " Th is w il l t ea ch t he mo d el th at t he re is n o f re elunch! "

Selin: " W e s h o ul d a l so w r it e c o n st r ai n ts t o a c co u ntf o r t he r e la t io n b e tw e en a n e w b r ew e ry a n d i ts e x pa n -s i o n . W e n e e d t o m a k e s u r e t h at t h e m o d e l s o l u t io nw i ll n o t e xp a nd a b r ew e ry t h at h a s n o t be e n o p en e dyet."

Ali: " W i t h o ut t h o s e c o n s t r a in t s , I w o u l d i m ag i n e t h e

m o d e l w o u l d k e e p e x p a n di n g n o n - e xi s t i n g b r e w er i e sa s t h e e x pa n si o n c a pa c it i es a r e m u ch c h ea p er . Th e rer ea ll y s ee ms t o b e a lo t o f w or k b ut yo u a ls o s ee m t oh a v e e v e r y th i n g u n d e r c o n t r o l. L e t ' s g e t t o w o r k ! "

N o t e: T h e i n f o rm a t io n r e g ar d i n g t h e c o m p an y b a c k g r ou n d ,T u r k is h b e e r m a r ke t , a n d t r e n d s i n g l o ba l b r e wi n g i n d u st r ya r e a c cu r at e a s c o ll e ct e d a n d c i te d f r om v a ri o us s o ur c es i nt he I n te rn e t. T he p ro bl e m i s a h yp o th et i ca l o n e b u t i s s im il a rt o p ro bl em s E fe s h as b ee n f ac in g. Ef es ' r ea l d is tr ib ut io ns ys te m h as b ee n s im pl if ie d f or th e p ur po se o f k ee pi ng th em od el s iz e m an ag ea bl e. A ll t he c ha ra ct er s a nd p os it io nsm e n ti o n e d t h r o ug h o u t t h e c a s e a r e f i c t io n a l .

4.3. ExhibitsExhibit 4: Beer Production Process

B e er i s t h e p ro d u ct o f f e r me n ta t io n o f t h e c ar b oh y -d r at e s i n c e re a ls , s u c h a s m a iz e , r ic e , m il l et , o a t s, r y e ,w h e a t a nd m o s t c o m m o nl y b a r l ey . T h e m a i n i n g r ed i -e n t s o f b e e r a r e m a l t , w at e r a n d h o p s . M a l t , t h e p r o-c es se d gr ain t ha t ha s b eg un g er mi na ti on b y b ein gs oa ke d i n w at e r, pr ov id e s b ee r i ts b od y a nd co lo r.

H op s i s u se d in s ma ll a mo un ts t o p re ve nt t he b re wf r o m go i n g s o u r , bu t a l so b r i n gs a c h a ra c t e r is t i c bi t t e rf la vo r a nd a p le as an t a ro ma . W at e r c o ns t it ut e s a s m uc ha s 9 5 p er c en t o f t he i n gr e di e nt s u s ed i n t h e b re w in gp r o c es s . T h e mi n e r al c o n t en t i n w a t e r in f l u e nc e s t h eq u a l it y a n d t h e f l a vo r o f t h e b e e r .

B r ew in g o f b ee r i s e s se n ti al ly a f o ur - st a ge p r oc e ss . T h ef ir s t s t ag e r e qu ir e s m i xi n g m al t , s u ga r, h o ps a n d w at e ri n to w o rt b y m e an s o f a " c o ok i ng " p r oc e d ur e t h at i n -v o l v es m a s h in g a n d b o i l in g i n l a r g e c o p p e r k e t t l es . I nt h e s e co n d s t a ge o f b re w i n g , w o r t is c h i l le d a n dt r an s fe r re d i nt o a f er m en t at i on t a nk . Y ea s t is a d de di n t h e t h ir d s t ag e , t h r ou g h w h ic h f e rm e nt a ti o n t a ke sp l ac e in t h r ee t o t e n d a ys . I n t h e f i na l st a ge , fl a t b e eri s s t or ed f or s lo w f er me nt at io n a nd a gi ng f o r a f eww ee ks t o s ev er al m on t hs , de pe nd in g o n t h e t yp e of

beer being produced , after which it is carbonated andbottled.




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E x h ib i t 5: A b r i e f h i s t or y o f b e e r p r o du c t i on i n a n -cient times. S o u r ce : E f es P i l s e ne r(6)

H ow l o ng h a ve w e b ee n d ri n ki n g b e er ?

M an ki nd ha s b ee n b re wi ng a nd d ri nk in g b ee r f orthousands of years. The earliest recorded beer recipe

w a s f o un d in c l ay t a bl e ts w r it t e n 7 , 00 0 ye a rs a g o. B e ero r ig i na t ed i n M e so p ot a mi a a nd t h e n f o un d i t s w a y t oA na to li a a nd t h e N il e r iv er v al le y. F o ur t h ou s an d y ea rsa g o i n A n a t o li a , H i t t i t es , w ho h a d fo u n d e d o n e o f t h e

biggest and m ost sophisticated civilizations of its age,w er e d ri nk in g b ee r i n d ai ly l if e a s w el l a s i n s ac re dr i tu a ls . A n ci e nt E g y p ti a ns u s e d b ee r a s a r e m ed y f o rv a r i ou s m a l ad i e s .

V a ri o us c i vi l iz a ti o ns a r o un d A s ia a n d A f r ic a p r od u c edbeer using different types of grain. After the eighthc e n t u ry A . D . , h op s b e c a me a p a r t of t h e b e e r p r o d u c -t i o n p r o ce s s , e n a bl i n g b e t te r p r e se r v at i o n. I n M e d ie v alE u ro p e, m o na s te r ie s a n d a bb e ys w e re w h e re m o s t o ft he br ew er ie s w er e l oc at ed . Mo n ks h ad a n ea rm o no p ol y o n b e er pr o d uc t io n . I n t h e d a rk a g es w h ent hi s o ld c on ti ne nt w as i n t he t hr oe s o f ep id em ic s,d r in k in g w at e r w as o n e o f t h e m ai n c u lp r it s o f d i se as e .B e e r , on t h e o t h er h a n d , w a s b o i l ed a n d h e nc e s a ve dm a ny l i ve s a s a d is i n fe c te d a nd n o ur i sh i ng d r in k .

E xh i bi t 1 : E f es ' d o me st i c b e er s a le s v o lu m e o v er t h e y ea r sa n d t he g r o wt h o f i t s m a r ke t s h ar e . S ou r c e : An a d o lu E f e s

Annual Activity Report dated 2000.

E x hi b it 2 : S h ar e o f m a jo r pa r ti e s i n t h e T u rk i sh b ee rmarket (2000). Source: Finansinvest Research Report

dated 2001.

E x h ib i t 3 : C ou n t r ie s t o w h i ch E f e s e x p or t s b e e r. S o u r c e:Anadolu Group (http://www.anadolugroup.com/)

(6) http:/ / www.efespi l sener .com/


http://www.efespilsener.com/http://ite.pubs.informs.org/http://ite.pubs.informs.org/http://www.efespilsener.com/


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Exhibit 6: Malt and beer transportation costs.

E x h ib i t 7: B e e r d e m an d f o re c a s t a t t h e d i s tr i b u ti o n c e n t er s f o r th e n e x t th r e e y e a r s.

Exhibit 8: The current malt and beer production capacities, and malt yield




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E x h i bi t 9 : C u r re n t d i st r i b ut i o n p l a n f o r Y ea r 1

E x h ib i t 1 0 : C o s ts o f o p e n in g an d ex p a n di n g b r e we r i es a t th e p o t e nt i a l s i t es .



beer in classroom _case study on location &distribution decision

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