Operational Research Process of British American Tobacco: Afrin Akter Tumpa ID: M23030204151 Uchyas Roy ID: M23030204149

Operational Research Process of
British American Tobacco

Afrin Akter Tumpa ID: M23030204151
&
Uchyas Roy ID: M23030204149
INTRODUCTION
British American Tobacco, the

second largest Tobacco Company in
the world is also the world’s most
global tobacco company. Based in
London, UK, it operates in more
than 50 countries with 85,000
employees selling more than 300
brands in more than 180 markets
worldwide along with Bangladesh.
LOCAL CURRENT SCENARIO
Mymansingh
Sylhet
Bogura
Dhaka
Narayanganj
Cumilla
Khulna
Chattogram
Linear Programming (LP)
A model consisting of linear relationships

representing a firm’s objective and resource
constraints
LP is a mathematical modeling technique used to

determine a level of operational activity in order to
achieve an objective, subject to restrictions called
constraints
LP Model Formulation
 Decision variables
 mathematical symbols representing levels of activity of an operation
 Objective function
 a linear relationship reflecting the objective of an operation
 most frequent objective of business firms is to maximize profit
 most frequent objective of individual operational units (such as a
production or packaging department) is to minimize cost
 Constraint
 a linear relationship representing a restriction on decision making
Linear Programming (LP)
Linear Programme for British American Tobacco :
BAT wants to cultivate Chew and Cigar. Cultivating Chew costs Tk.200
each kg and cultivating Cigar costs Tk.220 each Kg. BAT knows it
cannot sell more than 50 kg so it doesn’t want to produce more than
20kg and can not invest more than Tk.6500. BAT exoects to get a profit
of Tk.40 from Chew and Tk. 45 from Cigar in each Kg. How many of
each type should produced to maximize profit?
Here, BAT can solve this issue by LP method to get the way of
maximizing the profit.
LP Model Formulation (cont.)
Max/min z = c1x1 + c2x2 + ... + cnxn
subject to:
a11x1 + a12x2 + ... + a1nxn (≤, =, ≥) b1
a21x1 + a22x2 + ... + a2nxn (≤, =, ≥) b2
:
am1x1 + am2x2 + ... + amnxn (≤, =, ≥) bm
xj = decision variables
bi = constraint levels
cj = objective function coefficients
aij = constraint coefficients
Graphical Solution: Example
x2
50 –
40 –
4 x1 + 3 x2 120 lb
30 –
Area common to
20 –
both constraints
10 – x1 + 2 x2 40 hr
| | | | | |
0–
10 20 30 40 50 60 x1
Game Theory
Rules, Strategies, Payoffs, and Equilibrium
 Economic situations are treated as games.
 A player's payoff is the amount that the player wins or loses in a
particular situation in a game.
 A players has a dominant strategy if that player's best strategy
does not depend on what other players do.
Nash Equilibrium
 Occurs when each player's strategy is optimal, given the
strategies of the other players.
 A player's best response (or best strategy) is the strategy that
maximizes that player's payoff, given the strategies of other
players.
 A Nash equilibrium is a situation in which each player makes his
or her best response.
Prisoner's Dilemma
 Famous example of game
theory.
 Strategies must be
undertaken without the full
knowledge of what other
players will do.
 Players adopt dominant
strategies, but they don't
necessarily lead to the
best outcome.
Example
 British American Tobacco is having a dilemma to plant Chew
and Cigar into two lands because of fertilization issue. Now by
game theory BAT can easily figure out that how much to
cultivate Chew and Cigar in which land?
Decision Making Process
Maximin Criteria
 This criterion is the decision to take the course of action which
maximizes the minimum possible pay-off. Since this decision
criterion locates the alternative strategy that has the least
possible loss, it is also known as a pessimistic decision
criterion. The working method is:
Minimax criteria
 This criterion is the decision to take the course of action which

minimizes the maximum possible pay-off. Since this decision
criterion locates the alternative strategy that has the greatest
possible gain.
Transportation for BAT
 BAT ships truckloads of tobaccos from three silos to four
destinations. The supply (in truckloads) and the demand (also
in truckloads) together with the unit transportation costs per
truckload on the different routes are summarized in the
transportation model in Table 5.16. The unit transportation
costs, c De (shown in the northeast corner of each box) are in
hundreds of dollars. The model seeks the minimum-cost
shipping schedule x ij between silo i and mill/ (i = 1, 2, 3; j = 1,
2, 3, 4)
Transportation for BAT
Supply Chain Management of British
American Tobacco
This Presentation doesn't inspire or motivate any
individual to smoke or take any Sort of tobacco related
components .
Tobacco consumption is injurious to health

Supply Chain Management of British American Tobacco
British American Tobacco Has a very structured supply

chain system.
 Primary production
 Secondary Production
 Filter Manufacturing Department
 Tech Support Main functions of all these sub departments are as follows:
• Inventory Management
 Maintenance • Distribution Management
• Channel Management
 Logistic
• Payment Management
 Procurement • Financial Management
• Supplier Management
 Utilities
• Transportation Management and
 Quality Testing • Customer Service Management
SUPPLY CHAIN PROCESS
Raw Materials Supplier Manufacturing
Distribution Customer Consumer

Supply Chain Process of British American Tobacco
• 18 leaf operations • 55 Factories, • More than 50 • 26,000 trade

contract and support • 47 of which countries with marketing and
over 90,000 farmers; produce cigarettes, 85,000 employees distribution
• More than 20 third- in 48 countries, selling more than employees globally
party suppliers, • 15 green- 300 brands in more
contract approximately leaf threshing than 180 markets
260,000 farmers. plants worldwide.
worldwide.
1 Source 2 Production 3 4 Distribution

Marketing
SUPPLY CHAIN MANAGEMENT INFORMATION
FLOW
Information Capacity, promotion plans, delivery schedules
Material In process products, finished goods
Finance Credits, consignment, payment, invoice
Suppliers Manufacturers Distributors Retailers Consumers
Sales order, inventory, quality, promotions Information
Returns, repairs, servicing, recycling, disposal Material
Payment, consignment Finance

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Operational Research Process of

British American Tobacco

British American Tobacco, the

A model consisting of linear relationships

LP is a mathematical modeling technique used to

Linear Programme for British American Tobacco :

Max/min z = c1x1 + c2x2 + ... + cnxn

 This criterion is the decision to take the course of action which

Tobacco consumption is injurious to health

British American Tobacco Has a very structured supply

Raw Materials Supplier Manufacturing

Distribution Customer Consumer

• 18 leaf operations • 55 Factories, • More than 50 • 26,000 trade

1 Source 2 Production 3 4 Distribution

Material In process products, finished goods

Finance Credits, consignment, payment, invoice

Suppliers Manufacturers Distributors Retailers Consumers

Sales order, inventory, quality, promotions Information

Returns, repairs, servicing, recycling, disposal Material

Payment, consignment Finance

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