2 Aggregate Capacity Planning and the Kellogg Company

Abstract: The primary goal of this paper is to demonstrate, using the analysis of the Kellogg Planning System, that an effectively developed large-scale linear programming model implemented in a company can lead to reduced production, inventory, and distribution costs, and optimized operational and tactical plans, which is of practical interest to operations managers. LINEAR PROGRAMMING NEEDS MORE ATTENTION Aggregate planning (also known as production and employment scheduling) and its descendant, hierarchical planning, have been topics of interest for almost 50 years. As a result, many different approaches are available for solving the aggregate capacity planning problem now. One of the mathematical programming techniques is linear programming. This complex mathematical algorithm is not easily understood and implemented. However, it can provide management with improved acumen to see the situation clearly and recognize possible opportunities to improve productivity. I chose this topic in order to became more familiar with this modeling technique because the adoption of this method is expected to increase [Fogarty, Hoffmann, Stonebraker 1989J. Section I briefly discusses the aggregate capacity planning problem and linear programming cos