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A Logistics Analysis at Heinz

Author

Listed:
  • Sunder Kekre

    (Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Purushottaman Nandakumar

    (Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Thomas A. Powell

    (Financial Planning and Control, Heinz USA, Pittsburgh, Pennsylvania 15230)

  • Sampath Rajagopalan

    (School of Business Administration, University of Southern California, Los Angeles, California 90089)

Abstract

Heinz USA and Carnegie Mellon University examined various options for shipping tomato paste from Heinz's processing facilities on the West Coast to its Midwest factories. Seasonal variations in demand and supply for tomato paste, coupled with varying freight costs, caused the selection of appropriate means of transportation to be complex. We developed a decision support system (DSS) to assess the costs of using three options: specialized tank cars, Scholle bags, and a combination of both. The model demonstrated that tank cars were more economical than bags when the utilization of cars was above a critical level. The analysis gave management a powerful tool to assess alternative investment strategies and the sensitivity of operating costs and performance under various business conditions.

Suggested Citation

  • Sunder Kekre & Purushottaman Nandakumar & Thomas A. Powell & Sampath Rajagopalan, 1990. "A Logistics Analysis at Heinz," Interfaces, INFORMS, vol. 20(5), pages 1-13, October.
    • Handle: RePEc:inm:orinte:v:20:y:1990:i:5:p:1-13
    DOI: 10.1287/inte.20.5.1
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