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1. The Coca-Cola Company
Develops products
Produces the advertising and
programs to support those products,
and
Sells syrup concentrate to Coca-Cola
Enterprises and other bottlers, etc.

2. Coca Cola Enterprises
Combines the product concentrate
with other ingredients to
manufacture and package our
beverages.
Markets and distributes products to
retail customers and consumers.

3. Coca Cola Enterprises
The largest soft-drink bottler in the world,
The Coca Cola Company owns 42 % of
the outstanding common stock of Coca-
Cola Enterprises
Net concentrate/syrup sales to Coca-Cola
Enterprises were $3.1 billion in 1998 or
approximately 16 % of sales.
3.8 billion unit cases in 1998
Net operating revenues of $13.4 billion
EBITDA $1.989 billion

4. Full Service Business
CCE’s vending machine operations
Owns and operates approximately 200,000
vending machines in the US
North Metro Atlanta Sales Center
approximately 2,000 machines
approximately 8 drivers
area covering 190 sq. miles

5. Vending Machines
Support 4 to 12 flavors
Hold 8 to 12 columns of cans
30 cans per column

6. Our Example
5 Flavors
10 columns
Customer service -- in-stock probability for
all flavors 99%

7. Issues
Which flavors do we stock?
How many columns do we stock for each
flavor?
How often to we restock the machine?
How do we build driver routes?
How many drivers and trucks do we
need?

8. Other related questions
Can we make some of these problems go
away?
Vending machine design
Size
Flexibility
Number of flavors
…

9. Current Operations
Machine put on 7, 14, 21, … day schedule
based on volume
Drivers assigned routes to cover
machines
Missed machines rolled over to next day
Driver allocates columns to flavors and
fills
Drive pay partly based on cases loaded
Company prescribes some flavors

10. Which flavors do we stock?
What are the drivers?
Revenue

11. Our set up
Flavors we must carry
Coke
Diet Coke
Sprite
Other flavors we’ll consider
Caffeine free diet coke
Minute Maid
Nestea

12. What data do we need?

13. Maximize Revenue
What flavors?
Flavor Cans/Hour
Coke
Diet Coke
Caff. Free
Sprite
Diet Sprite
Minute Maid
Nestea

14. A better model?
Customer profiles
Diet anything
Any variety of Coke
“Healthy”
Fraction of all customers fitting profile
Choose flavors that satisfy the greatest
fraction of the population

15. Example
Profile % Coke Diet Coke Caff. FreeSprite Diet Sprite Minute Maid Nestea
Any Coke 30%
Any Diet 20%
No Caffeine 5%
Healthy 10%
Coke 12%
Diet Coke 4%
Caff. Free 2%
Sprite 6%
Diet Sprite 7%
Minute Maid 3%
Nestea 2%

16. An Optimization Model
Profile % Coke Diet Coke Caff. Free Sprite Diet Sprite Minute Maid Nestea
Any Coke 30%
Any Diet 20%
No Caffeine 5%
Healthy 10%
Coke 11%
Diet Coke 4%
Caff. Free 2%
Sprite 6%
Diet Sprite 7%
Minute Maid 3%
Nestea 2%
Selected? 5 1 1 0 1 1 1 0

17. How many columns?
We have chosen flavors
We know expected sales rates (possibly
based on what else is in the machine)
We stock so that...

18. The Bottleneck
First run out of some flavor as late as
possible
Flavor Average Cans/hrLanes Run out Time
Coke 0.54 2 110.77
Diet Coke 0.17 2 360.00
Caff. Free 0.08 2 720.00
Sprite 0.25 2 240.00
Diet Sprite 0.29 2 205.71
Minute Maid 0.13
Nestea 0.08 Minimum run out
Total 1.54 10 110.77 hours
4.62 days

19. How often to restock?
What are the issues?

20. Service Level
Restock Interval 7 days
Coke Diet Coke Caff. Free Sprite Diet Sprite Minute MaidNestea
Stock Level 120 30 30 60 60
Demand Rate (cans/hr) 0.54 0.17 0.08 0.25 0.29
Probability in Stock 1.00 0.69 1.00 1.00 0.95
Service Level 65%
Poisson CDF: Probability of at most Stock Level arrivals
in Restock Interval days

21. Service Level vs Interval
Service Level
0%
20%
40%
60%
80%
100%
120%
1 2 3 4 5 6 7 8 9
Restock Interval