An Integrated Production, Distribution, and Inventory Planning System

Abstract

ABSTRACT. The critical importance of integrating production, distribution, and inventory (PDI) operations has long been recognized by top management of many companies. Now. using (he laiest advances in Managemenl Science modeling and solution technology, an integruied computer-based PDI system has saved approximately $18 million dollars during its first three years of implemenlalion for a major national firm. Agrico Chemical Company. According to ihe Vice-Presideni of Agrico Supply and Dislribulion. an addilional $25 million savings is anticipated over the next two years.Broughi about by close cooperation between company officiais and an outside staff of Management Science consultants, the PDI system has been used extensively to evaluate the benefit/cost impact of alternative capital investments in both shon-term and long-term planning decisions. The development of the system underscores the value of recent Management Science innovations that have made it possible to analyze interacting influences too numerous and complex to be analyzed adequately only a few years ago.Advanced network methodology incorporated inio Ihe PDI system required onl> one one-hundredth of the computer lime and cost of meihodologies previously used. The power and flexibility of the new Management Science tools have also brought about increased communication and understanding of key company operations. This increased communication and understanding stems from ihe inherent '"pictorial" nature of network-based models, which facilitates interpretation of these models and policy recommendations based upon their solution. IN VENTORY/PRODUCTION; NETWORKS/GRAPHS INTERFACES November 1979 21 OverviewAgrico Chemical Company, with annual sales exceeding half a billion dollars, is one of the nation's largest chemical fertilizer companies. A subsidiary of The Williams Companies. Agrico mines, manufactures, and markets eight principal chemical products domestically and internationally. The company's success story, based on aggressive and forward-looking management, is typical of others in which a relatively small firm has been transformed into a leader in its field in less than a decade.In the mid-1970's Agrico encountered unexpected difficulties. The seasonal demand characteristic of the chemical fertilizer industry was creating a chain of intricate and far reaching effects that could not be responded to adequately. As a result, the company's profit margins were being seriously eroded by steeply escalating distribution costs. It became apparent that a multitude of interdependent factors made it impossible to find a remedy through customary metbods, such as studying cost figures and charts. Tbe web of interacting ihfluences wbich spanned tbe company's principal activities -production, distribution, and inventory -required an integrated computer-based planning system to uncover the appropriate decisions.In 1976. David Wilson. Vice-President of Agrico Supply and Distribution, in coordination with Herb Beattie, Vice-President of The Williams Companies Info...

Worldwide sourcing planning at Solutia's glass interlayer products division

“…Hax and Meal (1975) publication of a hierarchical planning system for a tire manufacturer, including a capacity planning model, initiated a stream of further publications. Glover et al (1979) present a LP model to minimize production and inventory costs in an industry with a seasonal demand pattern. Liberatore and Miller (1985) develop a hierarchical planning system for an American manufacturer of ceramic tiles.…”

Analytical Evaluation of Hierarchical Planning Systems

“…Glover et al (1979) describe a comprehensive production and distribution planning model developed for the Agrico Chemical Company. This is a network flow model explicitly concerned with the lower level decision of scheduling the flow of shipments from plants through the distribution system to warehouses.…”

Estrutura organizacional, capacidade dos serviços e impacto sobre o desempenho de fornecedores logísticos no contexto B2B

“…The search for scientific solutions to address these problems has a long history. The case study of Agrico Chemical is presented as one of the first modeling approaches to synchronize the triad, production -distribution -inventory, in its global supply and distribution network (Glover et al, 1979). Services operational complexity increases when the different constraints of capability, information, skills, capital, and human resources existing along the SC are considered.…”