A Logistics Analysis at Heinz

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.