Production and Operations Management 2026
Decision support for sales and operations planning under asymmetric power: A case study from the agrochemical industry
Abstract
Agrochemical companies operate multi-echelon, long-lead-time supply chains to serve seasonal and uncertain demand for crop protection products from farmers around the globe. To match supply and demand in this challenging setting, alignment of the sales and supply chain functions is crucial. We investigate this alignment task, building on a case study. At the case company, cross-functional coordination is achieved through annual sales and operations planning (S&OP) budget meetings. In the budgeting process, sales and supply chain organizations agree on a set of supply volume guarantees to align commercial and production plans. The guarantees must respect a maximum allowable inventory investment imposed by the business unit head. Our work focuses on the choice of these volume guarantees. Specifically, we support the S&OP negotiation process by developing an optimization-based budget planning model. Importantly, the model reflects differences in the decision-making scope and power of the relevant actors. Moreover, it captures the available flexibility of future plan adjustments by means of an affinely adjustable robust optimization approach. We evaluate the performance of our model against relevant benchmarks in two numerical studies, based on synthetic and real-world data. We also study the structure of the obtained solution. We find that optimizing the volume guarantees can substantially reduce lost margins, relative to uniform guarantees. For our real-world data set, our approach saves up to 32% relative to a current practice benchmark.
- DOI
- 10.1177/10591478261457704
- Sources
- openalex