ABSTRACT

Novartis’s supply chain has been experiencing several logistical challenges, most prominently

that of efficiency. This midterm progress report will focus on optimizing their warehousing and

distribution operations by reducing costs as well as increasing sustainability. These logistical

challenges include processing orders, schedule of delivery, and consolidating customer’s orders

and batches. Within the package solution, we will be developing a mathematical model using

CPLEX to implement a Bin Packing Model designed for the consolidation of orders, which aims

to maximize order weight and transition from less-than-truckload (LTL) to full truckload (FT)

shipments. This mathematical model integrates constraints such as weight, proximity, and

temperature requirements, utilizing priority scores to optimize order urgency based on delivery

dates and enhance shipping efficiency. In conjunction, pallet or full-case size ordering aims to

improve order efficiency by analyzing past customer orders and identifying trends. We aim to

optimize how often and how much customers should order, encouraging a full-case or a pallet

size ordering for cost savings. Through our design solutions package, our goal is to simplify

operations, cut costs, and increase sustainability by maximizing shipment weight and reducing

the environmental impact such as carbon emission and greenhouse gases of transportation.

Keywords: Logistical Challenges, Order Consolidation, Case/Pallet Size Orders, Optimize Commented [ML1]: Pick 5 max

Shipments, Sustainability
 PHARMACEUTICAL SUPPLY CHAIN: WAREHOUSING AND DISTRIBUTION
EXCELLENCE AT NOVARTIS CANADA

INDU 490 - Capstone Design Project

Presented to:

Dr. Onur Kuzgunkaya

Team 2 Members:
Mikayla Lipes - 40129765
Julian Spinoso - 40156569
Lana El Sabban - 26847684
Paolo Chiriatti - 40113685
Vuong Linh Nguyen - 40126243
Mazen El-Ariss - 40125351

A Capstone Midterm Progress Report Submitted in Partial Fulfillment of the Requirements of

INDU 490
Concordia University
December 3rd, 2023
 Table of Contents
ABSTRACT ................................................................................................................................................. 0
1.0 INTRODUCTION........................................................................................................................... 3
2.0 UPDATED LITERATURE REVIEW .......................................................................................... 3
2.1 Article 1: Models and algorithms for three-stage two-dimensional ............................................. 3
bin packing .............................................................................................................................................. 3
2.2 Article 2: Prioritization via Stochastic Optimization .................................................................... 4
3.0 DESIGNED SOLUTION PACKAGE................................................................................................. 4
3.1 Order Consolidation Model ....................................................................................................... 4
3.1.1 Case study: Application of Order Consolidation Model on a Small-Scale Data ........... 5
3.1.2 CPLEX model and results of the case study ............................................................................ 7
3.2 Full Case Size Ordering.................................................................................................................... 8
4.0 FUTURE WORK .......................................................................................................................... 10
4.1 Order Consolidation Model ........................................................................................................... 10
4.2 Full Case Size Ordering.................................................................................................................. 10
5.0 CONCLUSION ................................................................................ Error! Bookmark not defined.
6.0 REFERNCES ..................................................................................................................................... 12
7.0 APPENDIX ......................................................................................................................................... 14
A. Case study: Consolidation Model CPLEX.................................................................................. 14
B. Case Size Ordering ....................................................................................................................... 17
C. Updated Schedule.......................................................................................................................... 17
D. ELSEE ............................................................................................................................................ 18
 1.0 INTRODUCTION
Novartis is a renowned leader in the pharmaceutical industry. They currently operate out of a

warehouse they outsourced to UPS in Burlington Ontario. Novartis pays a monthly fee to UPS for

the services and space for their products being stored. This monthly fee varies depending on the

needs of the warehouse and distribution requirements to fulfill their customers' orders. Currently,
Commented [PRCM2]: https://pdf.sciencedirectassets.co
m/271700/1-s2.0-S0377221707X05654/1-s2.0-
one of Novartis' biggest challenges is maximizing weight per order. This challenge is from multiple S0377221706003067/main.pdf?X-Amz-Security-
Token=IQoJb3JpZ2luX2VjEMv%2F%2F%2F%2F%2F%2F%2F%
issues in their current system; consolidate of orders, costumers ordering patterns, excessive 2F%2F%2FwEaCXVzLWVhc3QtMSJHMEUCIGm1hahUy8Nmo
NE5v3K%2BcSrWxtlofo4LaIVGCj0nxMQ4AiEA%2BqwyzpuyxE
o5BotXLtfphz4HlnU6Y3pMjBDcfCQ5QSQqswUINBAFGgwwN
spending on pick and packing cost, under-utilization of truck loads. The capstone team will be TkwMDM1NDY4NjUiDNdCyeROQKtlkjvbviqQBeRyBBmm5FY
XLR34FAWL1RtR%2FkSLKJGy2Q8d8zlA29ho5dRNsAlhBIsiaHp
8xxOjMVoMn5vnxXEYMfqeQBa%2B%2F4f28EpbTgWP2mXjG
addressing this issue by exploring Bin-Packing problems for a method of batching orders together,
iaK4T37iuz739aNisCpFkiBGD9qFHzvcQgtaLJYZ2ciMbm9Uem
mHbcOO8lk372DxICaiZXq4Ws5jrL%2FN0OmGfgcVHs8Pd7mh
analysis historical orders to understand who the customers and products that follow the 80/20 rule, vfFhaS2BGofrW%2B8zmBXZuG2fsX0qc%2BPFuHXiaXbgnLXps
KMTjvEwq9%2FDWu97yekA%2FIR%2BwhrGwsVh3IYwnuunz
UBXXUGVkWcmev4pf%2B%2FgpZsNOvNlQV%2FBMBhusLAo
order trends and frequency, and forecasting of customers' orders. By exploring the topics that are
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H0x21SymgAnNerNIOdZwNfDAJPHME6GCAH%2FLr4mMAP7
covered in our Industrial Engineering courses, the team will be able to propose a solution package nCLGIadosYNXHHbG4R3mzwad9lnymbJUTGdgVb%2Bt%2Fsb
bREjL8bE8ttwLFYFGY81ncxqyjXa3JQ6n1IQ%2BvLCXWTZYjnDI
IpanP89%2FRE6xfQMoL%2BGc6Joz9ddDcg1QTWF%2F5%2Fk
to Novartis that will help maximize their weight per order, resulting in a minimal cost. o4VZ5c0VGSALocTtvqWtT01jLgXjF0SLVK%2FjZxTBOaB65bn%
2FG4Zh6xI2EN5EuwXTLsDz0Upo%2BfpLIuhQauNRNLbaz9jm
0VDMQnb%2FYdusfl76sEJqwFDe%2FvEARykhk423Seie%2F9
2.0 UPDATED LITERATURE REVIEW a%2Fob95LfIqpCmU7gOqeexVChVHdQggXVF4Ll9I5tWhDJ4pl
bOtC7d3tCLIn9pM1vnc3wH30ZJNmwSLzxTuDwiHXohZmDdZ
The following section will discuss our updated literature review. aFmglJFPLlXLd0Q0bOy647P9vHUqtYq7C8fnDysIYqQgCGCWv
yc3VFLmeRJjZ%2BOoQEN2JYMvrBEuHspA2o9SXHeDH9WX1j
Vzr0hWbkUyo5hRMLHvrasGOrEBg%2F21Yp8DEpmwVT23oj8
2.1 Article 1: Models and Algorithms for Three-Stage Two-Dimensional b0Ypa0xDB9oDdv3MENFWTykVaFcNqAkp4jTC5K0lKc7ylpn%
2FoU%2By5gF4avd2EULwgTGK8z%2Fuku1OFIJKojIrfSn1Z093
Bin Packing Q0CObSWystKQf4shv1ZQ2G%2Fjw5p2eaUeM0WQ47%2BaP
The purpose of the first article is to provide a model with the goal of fitting multiple items within SayJ1%2Bz6kZzzIbt0y6PI75ziNTjlJLKgTtlM1DR9oFH62c%2Bzi
aQO3GssFVgelzSJNo9k2iBfvYIxPLf%2B5NtD&X-Amz-
a restricted space by using bin-packing methods. Within the article, the author includes constraints such as Algorithm=AWS4-HMAC-SHA256&X-Amz-
Date=20231202T185821Z&X-Amz-SignedHeaders=host&X-
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height and width and unique assignments. By analyzing the article, the team was able to implement the Credential=ASIAQ3PHCVTY57BKBCON%2F20231202%2Fus-
east-1%2Fs3%2Faws4_request&X-Amz-
objective function for the project which is to reduce the total amount of shipments. Additionally, the article Signature=cd874dd37b58b3940ee537635484b36f6033038e
d2366dd8f1dd59a40570ee51&hash=7dbd0f78325610ab5d0
divided the shipment into stacks and stripes which is an effective method but with the data constraints of 4cdf016da6d494a660eb0ea9b9b2c3f0a14d0b191bff1&host=
68042c943591013ac2b2430a89b270f6af2c76d8dfd086a071
76afe7c76c2c61&pii=S0377221706003067&tid=spdf-
the project, the team will use volume constraints. Overall, this article demonstrated a very efficient way to
92df111d-39e2-452d-a6f9-
8d5dbf84313b&sid=eda7938758dea04d5b3b7341a0128b3a
consolidate products onto the same bins, and overall reducing the total number of bins [4]. 6276gxrqa&type=client&tsoh=d3d3LnNjaWVuY2VkaXJlY3Qu
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 2.2 Article 2: Prioritization via Stochastic Optimization

The second article utilized by the team is an article with objective of using prioritization to optimize

the activities performed by the shipping system from the facility to the customers based on location. By

giving each location/customer a prioritization score, this permits the system to identify which orders are the Commented [PRCM3]: https://pubsonline.informs.org/do
i/pdf/10.1287/mnsc.2013.1865
most urgent and deliver to them first. In terms of the capstone project, prioritization principles can be

implemented within the model. Utilizing prioritization scores to represent the order’s Shipping Date is an

efficient way for the system to identify the consolidation window of each order depending on when they

must be shipped [5].

3.0 DESIGNED SOLUTION PACKAGE

The solution package is divided into two solutions. The first one is the Order Consolidation

model that will be utilizing the bin packing principles, and prioritization methods, while taking

constraints such as location, order type, and weight into consideration. The second solution

includes the optimization of case size ordering, in where the team analyzes historic demand and

determines the optimal order frequency for the customer and aims to reduce the number of yearly

shipments.

3.1 Order Consolidation Model

Currently, Novartis faces a logistical challenge where orders are placed with UPS for each

customer order received, without considering the potential for consolidation with other orders.

This approach often leads to less-than-truckload (LTL) shipments, which may not be the most

efficient in terms of shipping and processing cost and not able to use the full potential of Full truck

load (FT) discount.

The objective of our project is to develop a mathematical model that consolidates orders

received across all customers, aiming to maximize the weight per order. This strategy is focused
on achieving full truckload shipments rather than LTL, enhancing shipping efficiency. The model

includes a bin-packing approach and incorporates various constraints such as weight, deadlines,

geographical proximity, and temperature requirements. The model uses priority scores to manage

the urgency of orders, prioritizing those with the closest deadlines, and assigning shipping dates

for the incoming orders. This approach should lead to more efficient use of shipping resources,

potentially reducing costs and environmental impact.

3.1.1 Case study: Application on Small-Scale Data

To understand more about how we can work with a large set of orders from the company,

we have organized a case study where we created a small-scale model to gauge ourselves with

what results we are interested in and at the same time study the behavior of the model.To

understand more about how we can work with a large set of orders from the company, we have

organized a case study where the team created a small-scale model to gauge ourselves with what

results we are interested in and at the same time study the behavior of the model.

Sets and Indices 𝑾𝒊 : 𝑊𝑒𝑖𝑔ℎ𝑡 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟 𝑖, ∀ 𝑖 ∈ 𝐼

I = {1,2,…,N}: Set of orders 𝑽𝒊 : 𝑉𝑜𝑙𝑢𝑚𝑒 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟 𝑖, ∀ 𝑖 ∈ 𝐼

J = {1,2,…,M}: Set of shipments 𝑾𝒎𝒂𝒙 : 𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑤𝑒𝑖𝑔ℎ𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Note: M is not a predefined total number of 𝑜𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡

shipments, instead 𝒀𝒋 will determine how

𝑽𝒎𝒂𝒙 : 𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑣𝑜𝑙𝑢𝑚𝑒 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦
many shipments are actually used as a result
𝑜𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡
of the optimization.

𝑳𝒊 : 𝑉𝑜𝑙𝑢𝑚𝑒 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟 𝑖 (1 𝑓𝑜𝑟 𝐵𝐶, 0 𝑓𝑜𝑟

Parameters

𝑂𝑛𝑡𝑎𝑟𝑖𝑜), ∀ 𝑖 ∈ 𝐼
𝑪𝒊 : 𝑏𝑖𝑛𝑎𝑟𝑦 𝑝𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟 𝑓𝑜𝑟 𝑡𝑒𝑚𝑝𝑒𝑟𝑎𝑡𝑢𝑟𝑒 𝑡𝑦𝑝𝑒 Constraints:

(1 𝑓𝑜𝑟 𝑐𝑜𝑙𝑑 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡, 0 𝑓𝑜𝑟 𝑎𝑚𝑏𝑖𝑒𝑛𝑡), ∀ 𝑖 ∈ 𝐼

1. Truck Weight Capacity: ∑𝒊 ∈ 𝑰 𝑾𝒊 ∗
𝑷𝒊 : 𝑃𝑟𝑖𝑜𝑟𝑖𝑡𝑦 𝑠𝑐𝑜𝑟𝑒 𝑓𝑜𝑟 𝑜𝑟𝑑𝑒𝑟 𝑖, ∀ 𝑖 ∈ 𝐼
𝒙𝒊𝒋 ≤ 𝑾𝒎𝒂𝒙 ∗ 𝒚𝒋 , ∀ 𝑗 ∈ 𝐽

Decision Variables 2. Truck Volume Capacity: ∑𝒊 ∈ 𝑰 𝑾𝒊 ∗

1, 𝑖𝑓 𝑜𝑟𝑑𝑒𝑟 𝑖 𝑖𝑠 𝑎𝑠𝑠𝑖𝑔𝑛𝑒𝑑 𝑡𝑜 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝒙𝒊𝒋 ≤ 𝑾𝒎𝒂𝒙 ∗ 𝒚𝒋 , ∀ 𝑗 ∈ 𝐽

𝑿𝒊𝒋 :
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
3. Priority Constraints: ∑𝒋 ∈ 𝑱 𝒙𝒊𝒋 ≤
1, 𝑖𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝑖𝑠 𝑢𝑠𝑒𝑑
𝒀𝒋 : 𝒛𝒊 , ∀ 𝑖 ∈ 𝐼
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
4. Unique assignment of orders:
𝒁𝒊 : 𝐵𝑖𝑛𝑎𝑟𝑦 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑡𝑜 𝑝𝑟𝑖𝑜𝑟𝑖𝑡𝑦 𝑜𝑓 𝑜𝑑𝑒𝑟 𝑖,
∑𝒋 ∈ 𝑱 𝒙𝒊𝒋 = 𝟏 , ∀ 𝑖 ∈ 𝐼
∀𝑖 ∈𝐼
5. Separation of Cold and Ambient
1, 𝑖𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝑖𝑠 𝑎 𝑐𝑜𝑙𝑑 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 Shipments – Cold orders cannot be
𝑪𝒐𝒍𝒅𝒋 :
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
combined in the same shipment:
1, 𝑖𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝑖𝑠 𝑎 𝑎𝑚𝑏𝑖𝑒𝑛𝑡
𝑨𝒎𝒃𝒊𝒆𝒏𝒕𝒋 : 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑐𝑜𝑙𝑑 + 𝑎𝑚𝑏𝑖𝑒𝑛𝑡 ≤ 1, ∀ 𝑗 ∈ 𝐽
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
𝑥 ≤ 𝑐𝑜𝑙𝑑 , ∀ 𝑖 ∈ 𝐼, 𝑤𝑖𝑡ℎ 𝐶 = 1, ∀ 𝑗 ∈ 𝐽
1, 𝑖𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝑛𝑒𝑒𝑑𝑠 𝑡𝑜 𝑔𝑜 𝑡𝑜 𝐵𝐶
𝑩𝑪𝒋 :
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
𝑥 ≤ 𝑎𝑚𝑏𝑖𝑒𝑛𝑡 , ∀ 𝑖 ∈ 𝐼, 𝑤𝑖𝑡ℎ 𝐶 = 0,

1, 𝑖𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡 𝑗 𝑛𝑒𝑒𝑑𝑠 𝑡𝑜 𝑔𝑜
𝒐𝒏𝒕𝒂𝒓𝒊𝒐𝒋 : 𝑡𝑜 𝑂𝑛𝑡𝑎𝑟𝑖𝑜 ∀∈𝐽
0, 𝑜𝑡ℎ𝑒𝑟 𝑤𝑖𝑠𝑒
6. Location-Based Separation –
Objective Function – Minimize the total
shipment going to BC cannot be on
number of shipments and the weighted sum
the same shipment as shipment going
of order priorities.
to Ontario: 𝐵𝐶 + 𝑜𝑛𝑡𝑎𝑟𝑖𝑜 ≤

𝑴𝒊𝒏𝒊𝒎𝒊𝒛𝒆 ∑𝒋∈𝑱 𝒀𝒋 + ∑𝒊∈𝑰 𝑷𝒋 ∗ 𝒛𝒋 1, ∀ 𝑗 ∈ 𝐽

 𝑥 ≤ 𝐵𝐶 , ∀ 𝑖 ∈ 𝐼, 𝑤𝑖𝑡ℎ 𝐿 = 1, ∀ 𝑗 ∈ 𝐽 𝑥 ≤ 𝑂𝑛𝑡𝑎𝑟𝑖𝑜 , ∀ 𝑖 ∈ 𝐼, 𝑤𝑖𝑡ℎ 𝐿 = 0, ∀ 𝑗 ∈ 𝐽

3.1.2 CPLEX model and results of the case study

For details of the CPLEX model and solution after running the model, please refer to

appendix A.

We run the model with a small example set of data to analyze how the consolidation

activity will happen and what would be the anticipated results. The data contains 20 order lines

with different assignments for location, priority scores and order type (cold or ambient). As

mentioned in the mathematical model, M is not predefined, so we run the model with N potential

shipments (since in the worst case, each order could require its own shipment), and the model

will determine the minimum number of shipments needed to fulfill all orders given the

constrains. After solving the model, the number of shipments M will be the sum of 𝒀𝒋 t that are

set to 1.

From running our model, the following result was shown for 𝒀𝒋 .This that out of the 20
potential shipments, only 9 shipments will be used for 20 order lines.
y = [0 0 0 0 1 0 0 0 1 0 1 1 0 1 1 0 0 1 1 1]

The x matrix shows the assignment of orders to shipments. Each row corresponds to an order,

and each column corresponds to a shipment. A value of 1 means that the order is assigned to the

shipment. The same indication can also be applied to “coldShipment”, “ambientShipment”,

“bcShipment”, “ontarioShipment”, giving us the results of which shipment is cold or ambient and

which is going to BC or Ontario.

Since this model is based on a small-scale of selective data, it certainly has a lot of limitations

that we are actively working on. The current model does not account for different carriers with

potentially different cost structures, capacities, service levels, and geographic coverage. In a larger
model, we would need to consider carrier-specific constraints and adjust the objective accordingly.

The model considers only two locations (BC and Ontario). However, in a real-world scenario,

there could be many locations, each with different distance matrices, transit times, and cost

implications. We would need to do an analysis of the destination of the orders and create zones

based on the services of the carriers. Sensitivity or post-optimization analysis is important for

understanding how changes in input data affect the solution. The small model does not include

provisions for testing the impact of changes in demand, supply, costs, or service times. In our

model, there are also no costs associated with the shipments since we are still lacking information

about the cost structure the company have with UPS.

3.2 Full Case Size Ordering

To successfully execute the Full Case Size Ordering Project at Novartis, it’s essential to

understand the historical demand patterns. This involves the analysis of the historical data for past

orders made between January to August 2023 made by 54 customers across the 159 available

products. Novartis operates in units, case size is based on how many units fit in a case, and same

for pallet. To determine the number of cases in a pallet, one takes the pallet size units divided by

case size units. By analyzing this historical demand, the project aims to recognize recurring trends,

variations, focus on the 80/20 rule for key customers and products, and to provide guidelines for

customers to place full-size orders for single products. This strategic approach aims to reduce

Novartis’ spending on UPS pick-and-pack services.

Firstly, the identification of the most suitable forecasting model is a fundamental aspect of

this analysis. By leveraging statistical methods and forecasting techniques, the project team seeks

to pinpoint a model that best aligns with the historical demand patterns. This involves considering

factors such as seasonality, trends, and any events that may have influenced ordering behavior
during specific periods [3]. Please refer to Appendix B: Table 1 for a sample of the forecast. Key

points on demand trends and fluctuations will be highlighted, with a focus on understanding

whether certain products exhibit consistent demand throughout the year or if there are seasonal

patterns. Additionally, the project will aim to identify any anomalies or events that led to

significant spikes or dips in demand, which can cause Novartis to potential fluctuations in demand

that can cause stock out and back ordering [3].

Secondly, with the understanding of historical demand, the next step is analyzing trends to

determine the optimal order frequency and size. This involves evaluating the trade-offs between

ordering more frequently in smaller quantities versus less frequently in larger quantities. The goal

is to find a guide for customers that minimizes operational costs associated with pick packing

services that are provided by UPS while ensuring that customers' needs are met in a timely manner.

This guide will allow customers to order less frequently and in larger batches catering to a full-

size order of a product [2].

Next, to motivate customers to place orders with full size cases and or pallet, an incentive

can be explored to change their current method. Changing payment terms on the special orders

will allow the customer to delay payment and have more free cash on hand. An increase in payment

term is a recognized cost reduction initialize that companies can count to their Earnings Before

Interest, Taxes, and Amortization (EBITA) goals.

The outcome of this section of the solution package aims to achieve Economies of Scale,

by having customers order in large sizes less frequency, leading to a reduction in the operations

cost Novartis gets billed monthly by UPS [2]. Also, maximizing weight per order is the overall

goal of the solution package, this can be seen by transportation efficiency. As customers are

ordering less frequently, each shipment weight increases bringing it closer to the maximum
capacity. This allows for reducing shipping costs as well as being more sustainable by minimizing

their carbon footprints. When customers order in full-size cases and or pallets, Novartis will

achieve operational efficiencies, reducing the workload for both them and their customers.

4.0 FUTURE WORK AND CONCLUSION

Conclusion

4.1 Order Consolidation Model

Regarding the next steps for the Order Consolidation Model, the team will continue to add on to

the CPLEX model. The future model is expected to include all the customers, therefore all the locations,

and shipping carriers. The model will include the same principles as the current but will have the objective

of minimizing the total cost, within them the ordering, packaging, and transportation cost. By applying

sensitivity analysis, the team will be able to identify the optimal consolidation windows for each customer,

allowing there to be an optimized Shipping Matrix that Novartis and the customers will utilize and follow.

We also need to get the necessary information from the company, for example, the customer’s

daily orders, capacity for volume and weight, associated cost etc. Since we are working on

consolidating the orders based on the deadline, we want to see what the connection between the

frequency of consolidating and the time customers place orders is so that we can suggest a more

efficient shipping matrix. Along with adding constraints to our model. Additionally, by using Excel

VBA, the team will provide an optimized shipping schedule that will be shared by Novartis to UPS entailing

the ordering frequency and the corresponding shipments for each order.

4.2 Full Case Size Ordering

The next steps for the full-size are to complete the forecast for each of the customers that

make up the 80/20 rule with the top products for each customer 80/20. Following this we would
need to obtain the costs of units, cases, and pallets for the products. By obtaining unit costs and

selling costs (i.e., per unit, pallet, and case) from Novartis, we will be able to complete an ABC

analysis of each product. Next, we will do an aggregation of orders to be full case or pallet size for

each month keeping in mind the customer’s capacity. As a team, we will consider that if a customer

buys a certain amount of pallet or case size, that there will be a no-return policy. We will continue

working on the VBA code along with creating a user form for the case size ordering help services.

We are planning to implement PowerBI for the KPI of the records that were recorded in the VBA’s

User forms for Novartis agent performance. We will be creating a buying guide for our top

customers and products to push for an order (i.e., full case or pallet) at a predetermined order

frequency.
 6.0 REFERNCES

[1] Novartis, "NOVARTIS IN SOCIETY INTEGRATED REPORT 2022," 2023. [Online].

Available: https://www.reporting.novartis.com/2022/novartis-in-society/performance-in-

2022/financial-performance.html.

[2] Chopra S, Meindl P. Supply Chain Management: Strategy, Planning, and Operation, 7th ed.

Boston, Mass.: Pearson; 2019. www.pearsonhighered.com/chopra

[3] T. E. Vollmann, William Lee Berry, David Clay Whybark, and F. Robert Jacobs,

MANUFACTURING PLANNING AND CONTROL SYSTEMS FOR SUPPLY CHAIN

MANAGEMENT. McGraw Hill Professional, 2004.

[4] Puchinger, J., & Raidl, G. (2007). Models and algorithms for three-stage two-

dimensional Bin Packing. European Journal of Operational Research, 183(3), 1304–1327.

https://doi.org/10.1016/j.ejor.2005.11.064

[5] Koç, A., & Morton, D. P. (2015). Prioritization via stochastic optimization. Management

Science, 61(3), 586–603. https://doi.org/10.1287/mnsc.2013.1865

 7.0 APPENDIX

A. Case study: Consolidation Model CPLEX

Solution
// solution (optimal) with objective 18.1

// Quality Incumbent solution:

// MILP objective 1.8100000000e+01

// MILP solution norm |x| (Total, Max) 8.90000e+01 1.00000e+00

// MILP solution error (Ax=b) (Total, Max) 0.00000e+00 0.00000e+00

// MILP x bound error (Total, Max) 0.00000e+00 0.00000e+00

// MILP x integrality error (Total, Max) 0.00000e+00 0.00000e+00

// MILP slack bound error (Total, Max) 0.00000e+00 0.00000e+00

//

y = [0 0 0 0 1 0 0 0 1 0 1 1 0 1 1 0 0 1 1 1];

z = [1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1];

The Xij matrix used to identify which orders are going to which shipment.

coldShipment = [1 1 1 1 1 1 1 1 0 1 0 1 1 0 1 1 1 1 1 0];

ambientShipment = [0 0 0 0 0 0 0 0 1 0 1 0 0 1 0 0 0 0 0 1];

bcShipment = [0 0 0 0 1 0 0 0 1 0 1 0 0 0 1 0 0 0 1 0];

ontarioShipment = [1 1 1 1 0 1 1 1 0 1 0 1 1 1 0 1 1 1 0 1];
 B. Case Size Ordering

Table 1: Forecast of Relay Logistics Entresto 24MG / 26MG TABS (3X10)

C. Updated Schedule

Please see the attached Project Libre for a better view of the Gannt Chart.

Figure #: Gannt Chart Part 1

Figure #: Gannt Chart Part 2

Figure #: Gannt Chart Part 3

Illustration #: Team Contributions

LOI: All
ELSEE Presentation PowerPoint: All
Proposal: All
Mid Tern Report: All
PowerPoint Presentation: All
Bin Packing Model: All
Case/Pallet size ordering: All

D. ELSEE

This Appendix will address the Ethical, Legal, Social, Environmental, and Economical

(ELSEE) aspects as it is a critical part of the Capstone project the undergraduates must complete
to complete their degree. As the project is with a pharmaceutical company make it important as

there are law and standard Novartis must upload.

Novartis commitment to be carbon neutral by 2030 across its supply chain, plastic neutral

by 20230 and to eliminate polyvinyl chloride in their packaged by2025 and Net Zero by 2040, Commented [ML4]: Climate | Novartis

there are currently strategies being made across Novartis Global. As the scope of the project falls

with Novartis Canada in their Procurement Department. Within this department the Warehouse &

Distribution team is needed to find ways to reduce the demand for energy by improving the energy

efficiency for industrial and commercial operations [2]. In the past Novartis has noticed that their

customers are placing many small orders. Due to this, the company is processing each order as

they arrive without the consideration of consolidation them into one to save on resources, enemy,

and transportation. This practice is not sustainable nor environmental, the company is currently

spending excess cash that can be avoided and investment into their research to deliver treatments

to as many people who need them as possible. The team is in the process of developing a solution

package that would allow Novartis Canada to consolidate their ordered based on delivery region

and temperature the product must be stored, in conjunction with this, we are proposing a case size

buying guide, where Novartis employees could approach customers and motivate them to purchase

a full size case of a single product and look into their.

There are Canadian grants that promote Environment and Climate Change programs for Commented [ML5]: https://www.canada.ca/en/environm
ent-climate-change/services/climate-change/low-carbon-
economy-fund/challenge.html
organizations who support project that protect or converse nature, as our project keeps this in mind

we are currently exploring this option for a possible funding for implementation for Novartis [].

There is a grant called “Low Carbon Economy Fund” that is aimed for “project that reduce

emission, creates job, and save Canadians and companies money” [].
 As Novartis Canada is a large organization and works with suppliers and customers withing

the region, the goal would be to have all parties align for their ESG goals mentioned above. This

grant will allow for the proper networking building so personnel across the board could share and

gain knowledge of sustainable practices to reduce GHG (Greenhouse Gases) emissions. The

grants allow funds projects that use applicants for the GHG emissions, that will have direct results.

As the objective of our solution is to maximize the shipment size per truck, the goal is to essentially

just a truck to it full capacity and making the trip economical and optimal. Additionally, as

customer have the ability to currently place orders when they feel like it, our solution will batch

orders from customer within a region in order for them to be shipped together. In order to

implement this solution jobs will need to be created in order to forecast customer demand, analyze

customer ordering trends, upload data into the model for batching of orders, developer to maintain

solution.

As Novartis Canada, warehouse is in Burlington, Ontario and have their headquarters in

the greater Montreal Area. This project will directly affect Canada and the Canadia work forces,

as it would create multiple jobs and reduce it fuel consumption, based on transportation and energy

consumption.