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Abstract

In April 2016, the chairman of the partnership charged with building the CAD1 billion Highway 407 East Extension Phase 2 in Ontario was reviewing an email from the procurement team that recommended allocation of more than CAD45 million in contracts for the purchase of granular base material for the highway construction. He knew that the procurement team had worked for several weeks to negotiate and analyze the supplier's quotes, but after reviewing the recommendation, the chairman wondered whether the team's recommendation captured the optimal supplier mix and the most cost-effective selection of suppliers. It was certainly a good solution, but was it the optimal solution? Even with an experienced team, this was a difficult optimization problem to solve.
Location:
Industry:
Size:
Large
Other setting(s):
2016

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Abstract

In April 2016, the chairman of the partnership charged with building the CAD1 billion Highway 407 East Extension Phase 2 in Ontario was reviewing an email from the procurement team that recommended allocation of more than CAD45 million in contracts for the purchase of granular base material for the highway construction. He knew that the procurement team had worked for several weeks to negotiate and analyze the supplier's quotes, but after reviewing the recommendation, the chairman wondered whether the team's recommendation captured the optimal supplier mix and the most cost-effective selection of suppliers. It was certainly a good solution, but was it the optimal solution? Even with an experienced team, this was a difficult optimization problem to solve.

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Location:
Industry:
Size:
Large
Other setting(s):
2016

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