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The Kellogg Company Optimizes Production, Inventory, and Distribution

Author

Listed:
  • Gerald Brown

    (Operations Research Department, Naval Postgraduate School, Monterey, California 93943)

  • Joseph Keegan

    (Kellogg Company, P.O. Box 3599, Battle Creek, Michigan 49017-3599)

  • Brian Vigus

    (Kellogg Company, P.O. Box 3423, Battle Creek, Michigan 49016-3423)

  • Kevin Wood

    (Operations Research Department, Naval Postgraduate School)

Abstract

For over a decade, the Kellogg Company has used its planning system (KPS), a large-scale, multiperiod linear program, to guide production and distribution decisions for its cereal and convenience foods business. An operational version of KPS, at a weekly level of detail, helps determine where products are produced and how finished products and in-process products are shipped between plants and distribution centers. A tactical version of KPS, at a monthly level of detail, helps to establish plant budgets and make capacity-expansion and consolidation decisions. Operational KPS reduced production, inventory, and distribution costs by an estimated $4.5 million in 1995. Tactical KPS recently guided a consolidation of production capacity with a projected savings of $35 to $40 million per year.

Suggested Citation

  • Gerald Brown & Joseph Keegan & Brian Vigus & Kevin Wood, 2001. "The Kellogg Company Optimizes Production, Inventory, and Distribution," Interfaces, INFORMS, vol. 31(6), pages 1-15, December.
    • Handle: RePEc:inm:orinte:v:31:y:2001:i:6:p:1-15
    DOI: 10.1287/inte.31.6.1.9646
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    References listed on IDEAS

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