An Integrated Production, Distribution, and Inventory Planning System

The critical importance of integrating production, distribution, and inventory (PDI) operations has long been recognized by the top management of many companies. Now, using the latest advances in management science modeling and solution technology, an integrated computer-based PDI system has saved approximately $18 million dollars during its first three years of implementation for a major national firm, Agrico Chemical Company. According to David Wilson, Vice-President of Agrico Supply and Distribution, and additional $25 million savings is anticipated over the next two years. Brought about by close cooperation between company officials 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 short-term and long-term planning decisions. The developement 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.