Let’s consider the case of a chewing gum manufacturer that is interested in optimizing its manufacturing network and sourcing strategy. The products include sugar-based and sugar-free sticks of gum. Following is a quick description of the ingredients and the manufacturing process:
• Key ingredients include these:
• Gum base—Sourced from one of two plants worldwide.
• Sweetener—Sugar or sugar-free substitute, sourced locally from regional suppliers at local prices.
• Flavor additives—Very low weight, sourced from one flavoring plant in Seattle, Washington, for all gum manufacturing plants.
• The manufacturing process starts with the use of mixing equipment to combine all ingredients into either sugar or sugar-free paste.
• The mixed product is then converted into thin sheets using an expensive piece of equipment called a sheeting machine. The sheeting machine also requires special parts to handle sugar versus sugar-free paste.
• In some plants, there are sheeting machines dedicated exclusively to each type of product (sugar and sugar-free).
• The sheeted products are then dried and cut into sticks.
• The dried sticks are then sent for final processing by packaging machines into any of several package types.
Let’s discuss the modeling of this BOM in terms of both the ingredients and the production processes.