CONFIDENTIAL
TOTAL PRODUCT DESIGN
SUMNLUM PRCcamw REy=
(JANUARY 1978 - MY LW9)
Suvmt (ML=gement 36r'riCAM DepU-b=Mt, Millba"k-)
I. VboduLrd (LeLf DepLrtment. lftllbank)
Dr. T. RLrjj (GroW R & D C)mntre,
Augufft, Mg
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CONFIDENTIAL
CHUN=
iNnlc=ICN
Suisun
1.B&T (UR & Zgport)
2.fifalaysian Tobu= CbmpLny
3.Wills (Now Zaaland)
4.Wills (Australia)
5.Imperial Tobacm Ltd. (Can-ds)
6.R&T BLmburg
7.Brown and Williamson (USA)
S. So=& Cruz (Bra--' 1)
CCNMMICNS
REVIEW CP PROGRESS
1.BAT (UK & Rqxrt)
2.U.T.C. (ULiarma&.)
3.Wills (Now Zealand)
4.Wills (Australia)
5.Imperial Tab%cco Ltd (Canada)
6. 'Brown VUl"ammon (UU)
AECENMU
Further 'Work
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INTRODUMCK
A cigarette may conveniently be v:LewW as =1prising three
components - the leaf blend, the pLper and the filter. The high degree
of interaction between these components makes the job of the product
designer a. complex one. The Total Product Design (TM) procedures
bring these three elements of cigarette design together in L VRY that
enables the product designer to explore a range of feasible blends,
papers or filters independently or in combination, vith the aid of a
computer. The product design problmm which the TM systems seek 'to
solve wee many forms, ranging from designing a totally cow product
meeting a marketing brief, to changing a single performance
ek-Acteristic, e.g. changing the nicotine delivery of an ezisting
product under the constraint of leaving the blood (ccmbi ris tion al leaf
grades) unchanged. Major oonstraiuts governing the availability of
paper types, filter tows and tobacco "es have also to be coped
with.
Single and multi-blend models biLve been devised. lberms
the single-blend leaf model handles the development of individual
blends, the multi-blend model produces recipies for up to the full
range of a compLny's blends within the constraints of current stocks
and future purchases. This brings the TM blending models into direct
involvement with the control and management of lea.f stocks and
purchases. Therefore, efforts have been made to promote the use of
additional programs vd3ich evaluate the consequences of current and
future recipies (determined by the blender) and purchases an leaf
durations. These duration programs exist in some form in a few
cr-runies but it is felt that they could be use extended in scope
to include projected values of blend deliveries and costs. Such
progr-2- are now being developed centrally in MillbLnk.
In recent years, imcrea.sing attention bas been focused on product
design due to -re intense market and ecowai pressures. With the
proliferation of league tables and the tendency towards their covering
a widening range of smoke , 1, cents, e.g. carbon monoxide and nitric
omide, together with demand pressures for certain leaf "es and the
availability of mare complex paper and :ft1ter constructions. the came
for computei-based systems to aid the blender and product designer is
becoming more
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2
CONFIDENTIAL
At their meeting on 27th January, 1M , the Ifillbank Product
Development Commi ttee agreed that the use of the TdW Product Design
(TYD) procedures should be validated in selected operating catzpanies.
The bw r1tories sixggested were:-
M 'U. K.
(ii) C%m nmr4a
(iii) Malaysia
Uv) South Africa
(V) Bra=Ll
To date, work bas been carried cut with the companies in the UK,
Canada and Malaysia. In addition, the opportunity has arisen 'to pay
working visits to New Zealand end Australia, and there bave been
discussJ ons with Brown & Will' -m-on and SAT (Hamburg).
In order to evaluate the TM procedures in tbese 'territories, a
tes- Was got UP 4, . I I mal ng one represents tive each from Group R & D
Centre (Southampton), Ahnagement Services Department (Mllbankc) and
Leaf Department (Millbank). The content of the TM progr@ and the
ways in shich companies were advised to use tbm were the jcdLnt
responsibility of R & D, MSD and Teaf Department. NED (OR Ckxxp) were
responsible for carrying out the systems design, computer programming,
documentation, etc. and for advising ox=enies on the implementation
of TPD computer systems and their relation to other leaf and materials
-nagement system. The programs were designed to be up-dated to
incorporate azy further research findings of GR & DC as these develop.
Leaf Department's responsibility was to ensure the utility, of the leaf
models to the user (the leaf blender/product developer), and to advise
him on its practical application and its relation 'to his overall
blending and leaf policy.
This report summarises the three progress reports covering T-PD
work from early 1978 to June 1979.
In the cases of BAT (UK & E), Malaysia Toba6ca Company and Wills
(New Zealand), the report on the practical work carried cut during the
visits has been agm-eed w1th these compLaies.
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CONFIDENTIAL 3
SUM"n
1. BAT UK & EXPORT
The assessment stage, which 'took place during the BH export blend
improvement exercise (Project Nostalgia), is judged 'M bave beea
completed with the leaf model having generated blender-approved blends
for =mple production and in-bol-ft testing. At 71blang's request, the
leaf model of the TPD system bLS been made fully operational and will
be used routinely in combination with their recently revised lest
stock control and planning programs.
2. MALAYSIAN TOBACM COMPANY
The TPD team visited MM in July, 1978 and, having demonstrated the
single-blend leaf model, left behind a range of blends to be
evaluated. MTC subsequently premsed on with a modi fled version of
their multi-blend model, incorporating features of the TYD made]. A
return visit was requested by NMC, and during this visit experiences
ww e excbsnzed on the single and multi-blend models which were used to
assi st in the determination of the 1979-crop North American leaf
purchase. Potentially nwDre effective blending models were tben
part-imy installed and revised Paper and filter models introduce.
Initial experience vas gained of the integrated use of the blending
models with MM's new computerised leaf stock control system, and now
the systems are being used in real-time, tackling day-to-day
problems.
3. W.D. & H-0. W= (NEW ZMAND)
The visit of the TPD team to New ZeLland in September 1978 saw the
introduction of the technique. '1he 'Wills =nagement welcomed this as
it provided R, fresh look at their leaf-blending and costing systems.
A range of alternative blends was produced for the two major brands
which lead to revised blending strategies and substantial cost
savings. Further blend developent work proceeded after the visit. At
Wills' request a return visit took place in May 1979, to consolidate
the work of the first visit and to Install the multI-blead model.
Wills bLve no computer--based systems to assist in leaf stock
management and control which would rmplement the TYD blendil* models.
Therefore, at their request, MM Mill1unk is developing a s7stem tor
them, the TPD 'team braving explained the concepts of integrated leat
systems.
The revised pLper and filter model was introduced and tested out
au= illy on a current delivery reduction dendgn problem. The
current situation is, therefore, that the alngle-blend, paper and
filter models are being Lmed optionally while the multi-blend and
leaf stock control models are being developed.
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CONFIDENTIAL - 4 -
4. W.D. & H.Q. vnia (AUSTPAMA)
P0110WIng introductory di=ussions with 'W. y@eeling (Imf Elmder) Wd
V. Vi=eDt (Product Designer) in Hillbank in Novamber lgM, meant
Interest was expressed to justify thLt the TyD team Visit Sydney. in ilLy
1979 an its return from Now Zealand. DIring the visit there were
discussions cc gengral approach-_g to product design and leaf blending,
as well as 00 m=e detailed subJects such as the me of an extended
list of blend constraints and ttke problem of leaf Stock management.
The multi-blend and fIlter/paper models were set-up and tested and data
prepared so that Wills are able to assess the full range of Tpo
techn.1ques.
S. IMPERIAL TIOBAOCO CAMOA
The Imperial Blender, A.P. Schaffer, visited England in MLy IgM and
the applicability of the TYD leaf model to the ITL situation 'Was
exam' ned, iad ng rM grade daLtL. ITL's major blend was briefly
exa-1 ned. but time did not permit the full assesment of the blends
produced.
It was agreed at that "me, hmmver, that the results looked promising,
and that it Ms proposed the Tr-D team should visit Qlagrin to identify
and tackle L SPOCilie problem, and also to OOMPLre the TPD filter and
paper models with the models developed by ITL.
ITL have since inclined towards the longer term, more Sorb4sticated
resea-rch orientated line into grade and blending matching, and to that
end a visit to Montreal vas made by Dr. Book of R & D in June 1979.
It is hoped that ongoing work in this area will lead to a better
understanding of the use Of qUL1itat1ve constraints on blends.
6. BAT HAMBURG
In the event two membem of R & D visited Hamha% for two days
in March, 19179. DiscussJons 'with the LAaf Department covered blending
methods currently in use and the plans alre&dy on tonA :for computerized
leaf stock management system, the first of which is due to become
Operational at the beginning Of 1980. The concep+.s underlying blend
modelling were discussed, though not TFD as such, but, in light of the
Previous discussions, the visitors felt they could not recoemmd the
adoption of TYD to Hamburg at this stage. Aspects Of TyD other ++mu
the blend models ware bowever discussed with Hamburg's R h D department
and Mutually useful arms identified, and a. follow-up visit to GR & Dr-
by Dr. Schneider is planned. Also, :foundations for further contact
betveOn the UM's ccf Hamburg and Millbartir have been laid.
7. BROWN& WnzIAMqW
Dr - Hook visited B & W for a week in June 1979 to diScuss, -=Gg other
things, product development and system for patoduct degdga. It became
apparent that B & W brave not yet men, and are not ax yet convinced ot
the benefits of the TFD models. TbG:Lr co,, leaf Stock management and
control system in shortly to become operational. It ma propoged,
hOwever, that a, member Of B L W Should visit GR & DC to explore the
potential value to 8 & V of blend modelling approaches.
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CONFIDENTIAL
CONC=ICNS
In Wh of the tbLrft OOMPwien which the TPD tesm bas visited to
implement and raduate the TPD 8"twe in depth (BAT (UX & Z), Wills
(NZ) Lad iM, the subwqwnt asawametnt by the local managemat
validates the introduction of the systems and their usefulness as an
Lid to product design. This 1A endorsed by, the fact tbmLt all three
are, or will shortly be, Using at least part of the system to solve
real-time Probler-q on a routine basis.
The Implementation of the system bad already produced targible remlts
and benefits in the form of cost savings and Improved leaf information
Lod planni na Systems. TYD can been seen as a management tool which can
be directed towards investigating the options open, and towards
achieving any one of a mm*)er of objectives.
It would mm that from the needs of the operating compnies men so
far, the leaf model of the TPD system will be required to intmmet with
the leaf-stock management wpiteim of the company concerned to get full
value from it. TbLis development work Ls being carried on apace in MTC,
BAT (UK & E) and )ED Millbank.
The technical problems of setting up and running the system bave been
overcome to the ex-tent that lea-f blenders themselves can operate and
control the programmes.
7he utility of the Tr-D models is currently being assessed by Wills
(Australia) over a wide range of blend constraints. Urect application
of the present models is not foreseen in Conads, the USA and Germany,
but contact will be retained.
The exercises attempted so tar have all been in compenies manufacturing
predominantly Virginia cigarettes With a wide flexibility of choice in
their leLf purchases, i.e., they import tobacco. At some stage it will
be advisable -to assess the system with a manufacturer of blended
cigarettes and also in a. market whetre predominantly domestic tobacco is
utilized.
Several companies in the Group have foreseen the wed for more formal
control in their product design and leaf-stock management procedures,
especially w1th the increasing wimber of complex factors involved, and
are Working towards that objective. 7hese trends are expected to
continue to develop.
Recommendations for further work together with the views of the PM are
appended.
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CONFIDENTIAL - 7 -
REVM OF PROGRESS
1 - BAT (UK & ECPM)
At the being of 1978, BAT (TJK and Export) wexe planning to
Cal"ry out a reblending exercise (Project Nostalgia) co one of their
major export brainds, B & H Pilter Kimgs. The object of the project
was to improve the B & H blend, if necessaxT at slightly higher blend
cost. It was agreed with BAT (UK and Export) that *hi a would be a
suitable project on which to carry out the first application of the
TPD system. The first stage of the project, which started in Lurch
19M, was to generate "on paper" a variety of alternative blends
spanning a wide range of blend characteristics determined by the LAmLf
Blender. Fman these blends, as stage two, seven blends would be choose
by, -the blender and made up as samples for evaluation by an accompany
panel of makers and by, R L D Southampton. Stage three would involve
the consumer testing of the two products most preferred.
Out of over one hundred computer-generLted blends examined in
stage one, seven acceptable 'an-paper' blends were selected by the
blender to cover cost increases of between 0 and 7 pence/lb. and a
range of other characteristics alch as the proportion of N. American
leat used and nicotine delivery, all of which lead to appreciable smWw
differences. During the in-boum testing, the seven bleindle were --4md
,against each other and against the given brief benchmarks - Swiss B
H-, Gallaher I a B & H and current BAT (UK & E) B & H.. Two of the
blender-selected computer-generated blends were preferred to all these
benchmarks.
It was agreed at this time that the TFD system bad proved its
value to the company and that its validity was not tied to the eventual
1ccoss, or otherwise, of the blends generated. This success is still
Tiltimately dependent an the approval and selection of the Teaf Blender.
Some of the benefits of the TPD method perceived during the exercise
were stated by, the BAT (UK & E) personnel who were involved:
111. It demands the assembly of a comprehensive
data-base which may be used consistently in varied
project work.
2. It provokoes the clear and written definition
of future assumptions with regard to leaf
purchasi.ng/pric-ing and blend characteristics.
3. It mmbles a methodical --l-tion of blend
develo; r P criteria and an appreclatlon ccE
cause-and-effect relationships which affect
Went' characteristics.
4. It stimulates a creative attitude to blend
developmient."
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BATCo LTD MINNESOTATOBACCOLITIGATION

CONFIDENTIAL
The RAT (13K A lkpwt) blower i tbat be lave armt
&can= to I OMPItOr Vwwiml 20 tb'Lt be could utillso tw oMm an &
routim bass. This bas been arr&MW and tw Wdei o g datL-bam is
July b@4-c revised tor me an IL aide rane of routim SW "ect
work.
It mu foreseen by the Woking parsomml tbLt further value Will
be accrued frcm the T11D s7stam since It will be integmted with the
re-designed o=pxteriwd stock control and p3onning Wgtsm which in
sbcc-tly to came into operation.
This development work, as mail an the Umvaemeafttion of the
present system, is be' nz carried on by I= and La&g
MjwkMM-w Woking.
with the Involvement ot WSD, Milbank. Soon, the jpaPer w3d :eLlter
wdels vftich cowlete the TYD system will be introduced to the MokIng
Product Development Team via their MSD.
BATCo LTD MINNESOTATOBACCOLITIGATION

9
CONFIDENTIAL
2. H.T.C. (MALlaYsiL)
First Visit
The TpD team visited MM from 15 June 'to 5 July, 1M. The aim
of this first visit was to bring -together the single-blend UK approach.
which largely used blender-selected .. I , blends to
indicate target blends and thus leaf purchase crows, Lod the recently
developed MM multl-blend approach which empbosdeed the balancing of
leaf stock durations, with the disadvantage of giving the blender
relatively little opportunity to control the blends produced as closely
as be would wish. Anotber objective was to demonstrate and install the
cigarette pLper and filter plug models.
It was agreed threat, since the p=ck-se order for 1978 crop US
leaf could still be adjusted. It would be beat for the TIPD blending
model to tackle the real-time problem of developing blends uning 1M
crop US leaf due to come Into production during the middle 'to end of
1979. Blends SPt (B & H) and SP2 (S.E.F.K. 555) were chosen an the
target blends as they together account for 92% of HIC's usings and 70%
of their local purchases.
By vary-Ing the constraints, a. wide range of alternative blends
was developed from which the MM blender selected a short-Ust covering
ideas on -ny combinations of Fast/West, straight-side/two-alde,
Canadian, loca.1/imported and stem proportions and nicotine levels.
By the end of the visit, IGC personnel bad become vezy familiar
with the system through full involvement with all aspects of the work.
Various solutions for their two major blends were left with. IUC and It
was agreed that some blends from these solutions would be made up end
tested by the end of the yea-r -
There was no time during the visit to test out the filter plug
and cigarette pLper models, but at the end Of the visit It was agreed
that options for reducing certain cigarette deliveries would be
examined in the UK i-ing the models.
The problem of blending within fixed-stiock constraints was
discussed. It was agreed that the MM multi-blend/stock system could
be usefully reduced in size by including tamer blends and by reducing
the "a list. In order to make the programme better suited to the
blender's needs the List of blend constants would be extended.
After the Visit, selected TPD-generated blends were manufactured
and analysed, and were, with slight modifications, ueed in IaCls growth
amd stem substitution programme. Some of the blends generated,
conforming to current MC policy, also belped them to reintroduce_
CNartmAJ-2n flavour grades as a partial sibstitution for US grades,
producing cost-sLvings and increased blend flexibility.
Also, in order to build up a database& flor the mult:L-blerd model,
extens1ve straight-grade analytical work was coamissioned by IaC Ln
part to be carried out fit R lk D.
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CONFIDENTIAL 10
Sawnd Visit
At the end of the first visit it =B &grew with IUC that & mttwn
visit would be watually beneficial. Thus, the Tr-D team visited
Malaysia, at the end of April (sub8witmatly travelling on to New
Zealand) with the following objectives.
1. To ezck-ge experiences in the we of the multi-blend models
developed at Millbank and in WTC covering the tec-hnical aspects,
the views of Teaf Mender, the 'mvact on leaf stock -annalment and
the problem encountered in btdlding up the leaf grade data-base.
2. To examine @he use of the single-blend model in the detexmination
of the 1979 crop imported lea-f purchase orders by grade.
3. Tb advise on using a local 1W compater and linear programming
package in preference to the NCR machine of the H&CS computer
bureau which is partly owned by JaC. The possibility of using an
1W machine could offer long-term as well as short-term advantages
W-ce the MAM bureau is "kely to switch to IBM machines.
4. Tb introduce 'the revised paper and filter models, discuss their mm
and apply them to a ma-rent design problem - most likely to be one
Concerning delivery reduction.
5. 'Tb discuss locally the recent work done by MM and Purchasing
Department, Hillbank on finding more cost-effective tows 'to meet
MTC's planned delivery reduction programme. Cost savings of about
E100,000 per annum have started to accrue with the delivery and use
of the new recommended tow.
During the second visit, a-11 of AGC's major blends were run on the
single-blend model with current data.. These runs, when examined and
used in conjunction with the end-of-period stock levels determined by
the duration and multi-blend models, have subsequently been used in a
revision of WIC's 1979 US crop requirement.
Problems with implementIng the Millbe-k mul ti-blend model on. an
IBM machine at Shell Oil Co. ;;eveated complete implementation of the
model. The Hillbank single-blend model ms tested successfully on the
IBM machine and joint Willbank-/W= efforts are now being applied to
resolve cuts-1-m-fing difficulties. IM's own multi-blend model, as
revised following the first TYD visit, runs satisfactorily at their
Usual c=puter service bureau, but due to the I'mitations lmp@d by
its NCR compzter, the full potent-in' of the blending programs is not
being achieved e.g. it in not poxzLble to ezamine more tion three
blends W-11tameously in the multi-blend program.
During the visit, WC's duration model was used operationally for
the first tinm, and beg:an to prove its value. Various enhancements
were reemmended which would make the model even more valuable In leaf
planning for the fature.
J:11.
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CONFIDENTIAL
3. WILLS (NEW_ZEALAND)
First visit
In July 1978, N.D. & R.O. Wills (New Zoaand) reqmsted belp
Teof Department, Millbank over tk@eir major blends wid their nmd to
improve their tobacco stock position. It was suggested to them that
the TTD system might assist with their deliberations cower blend
changes, and at the same time provide them with K. fresh View On tkair
blending and stock-cotnagement strategies.
The suggestion was welcomed and the Tr-D team vis@ted New ZeLland
from September 11-27th. Two formal objectives for the visit were
agreed with the loca.1 management:
1. Th investigate various strategies for blend formulations by
which, over a period of 5 years, -total leat costs could be
minimismd, having regard to:
a) Current stocks.
b) SmokIng qualities.
2. To assess the suitability of the Tr-D system for future use in
N.D. & H.O. Wills (New Zealand) Ltd.
To summari2a the position, Wills were in a tight situation with
22% of asmall market and long durations (29 months) of local tobacco
stocks. At the Te= Meeting in June UY78 it was agreed that loca I
durations should be brought down, amd, since it appeared that local
tobacco was more expensive thon most imported growths, cigarette blends
could be altered to include higher levels of imported grades shilat
maintaining, or even improving, smoking quality.
It was hoped that the TPD system could help 'to find a path
towards both these ends, and thus the formal objectives, with the
emphasis an cost-reduction, were agreed on.
Seen in this light, the TPD system bad a "real-time" problem to
to cl-I e.
The first week of the visit was spent assembling the tobacco data,
required to run the programs, i.e. sugar, nicotine and cost for each
grade. A grade-list of 46 imported and 15 local grades was chosen as
being flexible enough to afford a. wide range of choice ower possible
grades and growths. Chemical grade data for the 1WS crop purchaws
mm estimated from Wills dau and tccm averages of past crop years from
BAT (UK & E) I a records. 7b arrive at a realistic lamied price for
Jmportmd grades (some of Wills' price ca.1culattom bad Izitberto proved
misleading), the insurance, freight, handling, duty and weighted
interest charges were added to the latest f.o.b price of each grade,
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12 -
It vas decided to use the TFD system lUitiJL11Y to develop
alternative blends for Blend 61 (B & R) and Blend E12 (Sportsman) which
together a=unt for WS of Wills' total unings. Pbr the pzrpDoes of a
parallel financial exercise, low volme blends and R70 were dealt with
by combining them Into an equivalent "miscellaneous" blend defined ta
terms of its proportion of local and imported (by country of Origin)
grades. Thus, with the mi=ellaneous blend bold constant, it could be
seen bow blend changes in the two "bread and butter" blends would
affect the Company's strategy and its financia.1 position.
It Ms also assumed that since little could be done to alter the
cash-flow position of the lEr77/78 financial year (tobacco stocks bad
already been pLid for), the TPD system would be used In its predictive
sense to examine possible blends for 61 and 92 for the year 1.978179
(thus affecting the current buying policy) and for subsequent years.
As was the cam in the 111C situation, because the two major
blends together accounted for a large proportion of local leaf usage,
the program constraints bad to force a virtual "rua-of-crcV' choice
&across the two. However, to allow the program sune flexibility, two
plant position constraint categories were introduced for local grades,
as well as four "quality" groupings.
In the imported portion, US grades were categorimed as Eastern or
Western, and as stralght-side or two-side to give broad control on
flavour and impact. Other growths were constrained by maximum and
minimum limits.
Runs were made for both blends at different levels of local
tobacco lnclusion, amd also with different grade prices representing
current prices and estimates for the 1980/81 season. Thus a range of
blemds at different domestic inclusions and at different prices Were
looked at for 61 and 92. Blends were selected, not only for their
mak-Ing qualitities and cost sarings, but also for the fact that the
choices were compatible, in that they could be introduced as L
progression without drastically changing the style of smoke. 1he
selected blemds would also be relatively easy to purchase and maintain.,
The criterion in the imported section of both 61 and 92, was to
maintain a central core of flavour in the US portion iftilst rounding
and bala.=:Lng it with other imported mzr-US growths.
In this way, the TPD system proved flexible enough to generate
acceptable and practical blends for any range of blending strategies
the. wompany may care to adopt. In tLct, the costs of the blends
selected were used In the parallel financial analysis 'to point out the
moat advantageous ledLf-utilisation, policy, in caAh-flow terms. to be
adopted by Wills over the next 5 years. 7he Tr-D generated blends
indicated that Tills could make. substantial aLrings: in the medium and
longer term if they, were adopted.
During the exerciin, the Wills' Teof personnel wwe clamly
involved in the collection and presentation of dLtL as well as In the
setting of constralats and evaluation of solutions. The ;&per the
filter models of the TM system were presented to the Wills' Product
Development staff and it ms arranged for 'Wills to do the weesawy
meaxurements to build up a data bass to run these programme
Enthusiastic approval :Eor the Single-blend Model was expressed, and at
Wills' request, it wsm arranged that Wills could continue using tbe
systawn on a routine basis s-t the local MU bureau.
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CONFIDENTIAL 13
Second Visit
vills requested L return visit by the Tr-D team which subsequently
took place :from 14 - 21st May 1979. The agreed obj actives for the
visit were as follows.-
1. Coxaolidate the mork of the first visit, principally
In using the single-blend left model in coping with
the full ramge of blending requirements.
2. Examl ne the use of the present leaf model In the
determination of the 1.979/80 crop imported leaf
purchase orders, by grade.
3. To discuss the future development of the blending
programme in Wills including the potential for %xvina
a multi-blead model and leLf-stock -nagement
system.
4. To introduce the revised pLper and filter models,
discuss their use and apply "- to a current design
problem, mg kJ ng use of exisitng and fresh data., the
need for which bas already been discussed.
Between visits considerable progress bad been wade by Wills' TAN
Department in using the single-blend model to review current blends and
determine the 1979 US purchase order. In the event, the -in themes of
the visit were therefore the extension of the leaf blending models into
the overall process of leaf stock management, and the introduction and
implementation of filter and cigarette pELper models which together -k-
up the TID system.
The single-blend model was used for a re-run of Blend 83 and for
an initial rtm of Blend 96 in order to confirm the use of , and the
confidence In using, this model in practica.1 situations.
Two means of ba rd I ing multiple blends in relation to current and
projected leaf stocks were discussed, namely (I) the multi-blend model
LU which produces an oiprtl-l range of blends agalmat stocks and (II) a
'duration' model into which the blender feeds L range of blends be hLs
devised hill with their usages, which are them compared with
available stock and planned purchases. Each model bLs distinct
advantages and It would be expected that, as in Malaysla, there mould
be a place for each in Wills' leaf stock plan and control.
However, unlike MM, Wills have no computer support in the area, of
leaf. No 'off-the-ebelfl duration program was taken out by the team,
but the concept and an outline system was discussed and MD UL11bonk
are writing a program which incorporates features such as projected
leaf durations, surpluses, short-falls, suggested buying pir ograms ,
future blend costs and deliveries.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION

CONFIDENTk 14
During the ViAdt. the mati-blend wdel sms mt-up at IBM
Wellington, mid tested. 83me the visit bad to be dwrtowd c=pured
with fte initial plan, tire did not Vu-mit the Inprt of real data and
the running of a current prcblm. However, this will be tollowed
tbrough Jointly by Lmaf Department and MM Ifillbe-Jr, and Wills' Laaf
7be cJLzaz ettA paper and fUter model me set up and tested at ]MM
Wellington and several Irma life I runs mode by Wills' Product
Designer, so indicating the practicality of the effects on deliveries
and on the correspondingly necessary blood anal7now, of cbmagint
product features ==h an paper Porcmity and Wbu= cuts per J--h. The
awdel"im p-edictions appeared to tally well with already knmm effects,
but ccmplete validation is bond carried out.
An action plan, vaa agreed with the local Lomf Department and MM
@ftagewzrt to consolidate and mtwod the progress adds during the
visit.
co
BATCo LTD MINNESOTATOBACCOLITIGATION

CONFIDENTIAL
4. W=3 (AUSMALIA)
During early Novewher 1978, Meows. Reeling amd Vim;--out, the
Bia3der and Product Designer respectively for W.D. & H.O. Wills,
Australia were in Millbank and a presentation on the TPD system and
experiences was given -to them by the TFD team. Sufficient interest =a
aroused for Keeling to arrange to bR.Ve L not of Australian grade and
blend data. sent to London during the visit. 7his data v" Installed an
the computer and a "duciny" ble-Jimir problem set up. In addition to the
normal sugar, nicotine and cost grade constraints, Keeling also wimbed
to iaclude filling-power, total volatile bases (TVB) and protein
nitrogen, Ls controlling factors cover blends. Wills make
straight-grade measurements of these properties.
After Keeling's departure, correspondence on Tr-D was ezdbLnged
between Leaf Departments and betvmn the USDIs in Sydney and tondon.
Sufficient mutual interest ms aRarent to suggest that Si=* the TPD
team would be over-flying Sydney on the return from New Zealand, it
would be beneficial if the tw- stopped over for a tow days to kave a
further exchange of views. This Ides was welcomed by Wills.
Proposed outline objectives for the visit were as follcows:-
1. To Continue the discussions held with Keeling and
Vincent %hen they visited the UK last year, relLting
the TED models to the WIlls approach to product
design and leaf blending.
2. Th cover in greater depth the means of hamilIng the
blending and product design constzaints imposed on
or by, Wills, for example, In view of the high rates
of duty based on product weight, the use of the
concept of minimlsing the cost per %zait of filling
caracity.
3. Th discuss the related-prcblams of leaf stock
management, and bow this is being bermiled elsewhere,
includinz the use of the multi-blend model.
4. Th discuss the various technical problems of setting
up and rimninst the TPD models.
S. Depending on circumstazices, the wisbes of Wills, and
the opportunity to make progress locally before the
visit, to carry out runs with the TYD models.
BAT Co LTD MINNESOTA TOBACCO LITIGATION

CONFIDENTRL
The visit took place between 22 - 25th HLY,- 1979, w2d it We VWY
clear that since Kmling and VinCent's Visit to the UK, a lot of
tbouot bad been given 'to the powdble mays in Tbich the lml b1m3ding
models could be used.
In order to offset the brevity of the VI-sit, COUPLIting
arrangements had been made in advance and this maLie it pogadble to Mt
up and test the single-blend and multi-blend models. Further, the
blendinz situation was defined in terms of Individual blend
constraints, stock levels and IiJmly future parciaAes; of local leaf
By the end of the visit this information ma being Mt up on the
computer with the objective of using the multi-blend program to produce
a range of blends sufficiently realistic to be subsequently worthwhile
selecting for subjective a-asessment by L smoking panel.
It is of some interest and significance that the optiTniQlng
factor selected Jbr the blending program ma the filling power of the
blends, which indirectly should lead to the most cost effective mm mid
future purck-ses of leal, bearing in -1-1 the ve" high total cost of
leaf (due minly to duty at approximately AS 25 per kilo) in Australia.
This was the first time that this variable bad been used In the TM
blending program although with the. barvadian data, use was made of grade
density meiasureDents in using oost per unit volume as the optl-1-insr
factor. Mae progress of Wills in their use of filling powez will be
followed with interest.
Dur:Lnff the earlier dimussions: in the UK, Vincent pointed out
certa-in areas in which the paper and filter model would have to be
developed in order to be of significant use to companies which, like
Wills, already have a sophisticated approach to product design. One of
the areas mentioned was ventilation, and since the UK discussions, the
total effects of tip ventilation have been incorporated, although Mt
to the extent to which it will eventually be covered. 7he present
model was set up at the local computer bureau and by the end of the
visit, current product data was being assembled in preparation 1br some
test runs.
'Will's USM recently started to define a specification for a now
leaf stock duration prose= (the administrative and coating needs are
met by their computer'sed accountlng/budgeting system). 'There were
joint discuss-tions w1th the users in which experiences and ideas were
pooled. In view of the system being developed at HIllback, laltially
for Wills (NZ), the MM ,s; will kee@ In contact.
Overall, it is felt that the visit was of value to Wills
and to the TM team, with further benefits yet to be realised.
The team's assessment of the visit has been sent to Wills, and
their response is &waited.
BATCo LTD - MINNESOTATOBACCOLITIGATION

CONROENTIAL - 17 -
5. IMPERIAL TOBACCO LTD. (CANADA)
mr. Sch0fer visited the UK during the period 9th - 17th jky.
I-q78, primarily for the pLzrpose of discussing TIM procedures wd their
relevance to ITL. M2e leaf blending Situation at ITL was dewrUnd in
detail by Mr. Schaffer sho highlighted the constraints imposed on the
Company amd by, the Company on itself - Only local leaf is used and r=
buys approximately 30% of total flue-cured production. Ontario IeL:f
represents 90% of ITL's total purchases the 10% being in obligatory
purckmse of several Quebec and Maritime grades, which generally are of
lower quality than the Ontario leaf. '1he auction system for Ontario
leaf enables companies to buy other ++Wr' a rUD-Of-the-crop grade m:Lz.
For example, ITL and Ro++m-% tend to be more selective on quality
whereas the other companies buy on price. Overall, ITL PLY a Slightly
kLigher average price than the competition.
m group their 30 or so Ontario grades On a matrix With five
classd fications for qmlity ranging from mture/unblemished to very
trashy and five cla-Ifications; for plant position, namely, lugs,
cutters, cutter/leLf. leaf and tips.
ITL manufacture a total 15 blends, but of those only 7,
LCCOUnting for 90% of leaf Usings, are termed 'essential'. The bleoft
tend to be specified largely by their proportions of leaf quality and
plant position categories. For example, individual blends bave a
mature leaf content ranging trom 20 to 60%.
To demonstrate the applicability of the TED leaf model to the rM
situation, the ITL grade data was set up on the computer and
alternative rec:lp:Les sere developed for the company's major blend,
wbLich accounts for 40% of production. Teaf data comprised cost,
nicotine, reducing sugar, DFM (tar) &W fillimg capacity. Blend
constraints imcluded nicotine, DPH, sugar, 'quality' and plant
position. It was agreed that flexibility :in some of the blend
constraints should be possible, and so ranges (in cost terms) of blends
were produced corresponding to different sets of Constraints. In
addition, one set of blends was produced which minim'sod the cost per
unit filling capacity of the blend, -citing use of the grade filling
capacity data available for rM leaf grades.
Time did not permit either the full as-Amessmient Of the blends
produced or the carrying out of further oomputer runs. However, the
results looked promising and it was agreed in principle that a vludt by
the TPD team to. w-A& Should be made to set up the TM system and
identify and +-ckle a specific problem. The during would depend on the
availability of r= personnel and the install -tion of the new IM
computer in the company. The visit mould also give the opportunity to
use operatiowLlly the TPD filter plug and cigarette Paper models and
compare them writh models developed by IM which predict cigarette
delivery performance.
-Cmb
BAT Co LTD - MINNESOTA TOBACCO LITIGATION

CONFIDENTIAL
Dwj@W big visit 1k. SOWfOr WWOMW the view thLt al ti - gi
the = LpFrORCh ShOWd Pre"i go m & MgLng Of opt4,nj Md ng jeaf UMW
based on ooortmints laid down by bim v3sre gaa 10OW-tum p7tential
VL1U6 to r= in using L grade/bleW natebing approsch to give ftrtber
insight (as a back-up to his own amerience) into the type of
constraints be should use. An Important application would be to
determine what chemical cr other objective facbor, sre nwessary to
ded1ne the gmlitY of a grade or bland. Using this informiLtIon tbey
would alm to find local 01hatitutes for tobaccos which are in dnrt
supply.
MR411antly, at the R & D conference, doubts were expr Pusej
threat. although Of tbO the comPLnies represented, only rrL had bad any
experi6we Of it in operation, the Wamnt form of T.PD my heave
limitztiOnG an ftr an the requirements of the more advanced cmapLnIes
in the Group are concerned. It we suggested that efforts in R & D
should be d1reicted t"ards research an adnmed developw=s of t
be
cODr-ePt - In order to I" 80=8 the F- - Pa this research shoul d take, R D
staff bLVe vigitedConarls, USA Lod Germany.
During the visit to. Canada made by Dr. lbok in juns 3.979, the
f Irst Stages Of a. research programme to define the neceemry
constraints were agreed. A grade/blend mLtrbdLng model was set up on a
local bureau computer wing rMls aim OWp dgLta.. The early computer
rims were en a 6unesting that at least one of the "ea in
short supply could theoretically be partly M&tcbed in r4,,pqnj&s3 -pvvm by
blends of grades which we more readily available. The --t lmportant
stage will be to test whether, in the-se circunstancefil and within the
CAn=Lian contexts the PLrti&l chemical match Is sufficient to give a,
match in =Wdng quality.
BAT Co LTD MINNESOTA TOBACCO LITIGATION

CONHOENTIAL - 19 -
S. MIM A21D WnLJAHM Mu)
Following the remommendations of the IW9 Renearch Conference,
Dr. Book visited 8 & W for a wook in June lwg to d:L==s the research
programme for tbone TPD develOPMuts which vould be appropriate to the
more advanced Fannies.
B & W are developing their own omprter models wjm4ijr in
function to the paper, filter and ventilation modules of TPD, but
specially adapted 'Im US requirements. Altbough they do not require the
TT-D programmes as such, B & W well appreciate a claw exchange of ideas
and information on the basic models and systems ooneepts.
It wx agreed that fork would be carried cut by R h D to derive
relationds'ps which could be included in models for the ftctors (e.g.
the inclusion of expanded tobacco) which Inf3unnee tke physical
properties of the tobacco rod (wich an pressure drop), and the effects
tbese in turn would bLve on deliveries Such =:del& would eventually
be incorporated into the TM lystem.
B & W are in the process of implementing a now blood planning and
stock management system, which includes forecasts of nicotine content,
but they r--i n to be convinced of the value to ++W- of the blend
models of TPD, or of the possible extensions into grade or blend
matchl rig. Homever, it la intended that a member of B & W vWf will
visit the UK to explore in more detail the value to B & W of ame form
of blend modelling approach.
13AT Co LTD - MINNESOTA TOBACCO LITIGATION

- 20 -
ArCENDUK
CONFIDENTIAL
At the Millbank Product Development Group meeting of 14 June,
19M, the TPD tem were asked to prepmxe a abort note an companies
withi n the Group -for iblch the Total Product Design W I I Icould be
benef:Lci&l and practical, both from the point of view of technical.
resources and from the leaf side. The team also ftlt it Important to
cover areas which as yet bLve not been tackled. namely, blended
cigarette manutacture and situations vbere cnly locally grown tobacco
is used.
The compLnies, listed below by territorial groups, almost suggest
themselves as satisfying all or some of 'the above criteria.
EMPE
B&T (Suisse) S.A.
This would be an attractive exanv3e, not only bemuse of its
pradmity but also bec1use it has already expressed interest itself In
the TPD techniques, especially from the view of the control of leaf
stocks. It has many facets which could test the system's potential.
BAT Suisse uses both imported and domestic tobacco in its manufacture
of Virmin-la and blended cigarettes. Also, the Company operates in an
environment of relatively sophisticated product design,allawing 11or
factors such as gas-phase constituents, for which it bLs a substantial
straight-gra,de data, base. It certainly bas access to the necessary
technical resources, as well as having an in-company technical back-up
Lbility
Clearly, other European companies such as B&T Benelux and Suamen.
TupLkka bave the capability to Justall, use and exploit the system, but
they all, at the moment, have certain practical drawbacks which are not
apparent in BAT Suisse.
FAR EASr
(i) Singapore Tobacco Company
In a sense. SW would present a logical artensicn. to the application Of
the technique in UTC. STC has. it anything, better technical
facilities available locally "-n IUC has. It uses domestic and
imported tobacco in its manufacture of --inly Virginia, brands and it
h" also expressed interest In the technique.
(U) BAT Hong Kong
BAT (EK) manufactures both Virginia and blended cigarettes with totally
imported tobacco. It IMF L f0rWaXd-+h4nk41nsr company with adeqmte
resoumes and personnel.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION



AMIcA CONROENTIAL - 21 -
M BAT 1=72,
BAT KenyL is in a V:Lrgizxia mLrb:e-t and uses imported end Iic
tobac=. It bRZ L positive managawnt who have 01prunsed Interest in
ffystems for leaf planning and control. MM Millbank bas recently
visited the cacpwy-
(:Li) United Toba= Company
This is one of the companies initially nominated by the JGDC and Tkich
is still a possibility, although reservations have I'mm, expressed in
Hillbank as to whether the tire la appropriate-
CEMAL AND SOUTH AMICA
M Souza Cruz (Brazil)
@z is another URC nomination with vd= Little concrete pogrese: has
been made.
(ii) Nobleza-Piccardo (Argentina)
Robleza-Piccardo uses only domestic tobaczo for blended cigarette
manufacture. It has a strong USD back-up. 7be Territorial Tmf
Adv,iser sees definite uses for the system, especially on the planning
and stock contral side.
(iii)Cigarrera La Hoderna (Mexico)
This company, also, uses only domestic tobacco for blended cigarettes.
It bus a nl-ilar situation to the Argentinian company with good MM
:E CURREVr VIEW OF TBE PRCDUCT DEVELOPMENT CxFJOUP
a subsequent meeting of the MG on August 1, the above report and
Suggest1ons were discussed. The FM minated the :0ollowing
recommend a tions: -
"A report has been produced and will be circulated to the Territorial
Departments in order that they should decide the relevance 'to their
particular areas. It was thought that the -total pLclmge could have
application in Switzerland, but that pressure to encourage the we in
other companies was not required, since this would be catered Jbr
territorially." Minute 79/57 Total Product Design.
`-4
BAT Co LTD - MINNESOTA TOBACCO LITIGATION