# Portfolio Optimization

> The ideal product mix to maximize margin, meet commercial constraints and balance channels.

The product mix is one of a company's highest-leverage decisions, and one of the most reliant on history and intuition. Orion models the portfolio, channels and commercial constraints as an optimization problem, and returns the mix that maximizes margin within what the operation can actually deliver.

## Overview

- Area: Commercial Strategy and Markets
- Delivery: customizable solution
- First pilot: about 8 weeks
- Solution 01 of 15
- Topics: Optimal mix, Margin by channel, Dynamic pricing

## When this decision gets expensive

If two or more sound familiar, this solution will most likely pay for itself.

- The mix is set by history and negotiation, with no consolidated view of margin by channel.
- Low-contribution products consume production capacity and working capital.
- Price changes are decided in isolation, without measuring the effect on the whole portfolio.
- There is no quantified scenario to answer "what if we prioritize this channel?".

## What Orion delivers

- A mix optimization model with margin, capacity and commercial constraints in the same calculation.
- Simulation of pricing and channel prioritization scenarios, with projected results.
- Periodic portfolio recommendations integrated into the commercial planning cycle.
- An executive dashboard with contribution by product, channel and customer.

## Technical foundation

- **Mathematical programming:** Mixed-integer/linear formulation of the mix, respecting capacity, contracts and commercial minimums.
- **Elasticity and pricing:** Estimation of price response by segment, feeding the margin objective function.
- **Scenario analysis:** Trade-off frontiers between revenue, margin and capacity utilization.

## Indicators tracked

- Total contribution margin
- Margin by channel and by SKU
- Production capacity utilization
- Revenue per unit of critical constraint

## Case studies for this solution

- [Margin-based portfolio rationalization raised profit by 143%](https://orionotimizacao.com/en/case-studies/margin-based-portfolio-rationalization) — Revenue and profit rising while costs fall: cutting the items that destroyed margin, instead of cutting price or volume, was treated as a single optimization problem.
- [What to make at each plant: optimized allocation across a global manufacturing network](https://orionotimizacao.com/en/case-studies/production-allocation-across-three-plants) — With manufacturing plants in three countries, deciding what to make at each one is no longer a separate choice per site but a single optimization problem.

## Talk about this solution

WhatsApp: https://api.whatsapp.com/send/?app_absent=0&phone=5554991678345&text=&type=phone_number
E-mail: orion@orionotimizacao.com
Full method: https://orionotimizacao.com/en/method

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