Graeme Everett, Norske Skog Tasman; Rune Gjessing, Kjetil Vatn, Norske Skog; Andy Philpott, University of Auckland
Many businesses face uncertainty about demand in the face of economic recession. Global paper maker Norske Skog is familiar with this, as the company has experienced declining demand for its products due to electronic media replacing printed publications. O.R. models have become a vital part of the decision making process, helping the company to reduce costs and enabling senior managers to make difficult decisions. The suite of MIP-based decsion tools at Norske Skog was developed to optimize manufacturing, distribution, and sourcing of raw materials in Australasia. After becoming a part of Norske Skog in 2000, the methodology was futher developed for use in global operations. The tactical use of the models resulted in savings of $8 million US and $10 million US annually in Australasia and Europe respectively. In 2008 the model was used to contribute to a strategic decision to close two paper mills and a paper machine, saving $100 million US annually.
