Periodic review base-stock replenishment policy with endogenous lead times.

In this paper, we consider a two stage supply chain where the retailer's inventory is controlled by the periodic review, base-stock level (R,S) replenishment policy and the replenishment lead times are endogenously generated by the manufacturer's production system with finite capacity. We extend the work of Benjaafar and Kim (2004) who study the effect of demand variability in a continuously reviewed base-stock policy with single unit demands. In our analysis, we allow for demand in batches of variable size, which is a common setting in supply chains. A procedure is developed using matrix analytic methods to provide an exact calculation of the lead time distribution, which enables the computation of the distribution of lead time demand and consequently the safety stock in an exact way instead of using approximations. Treating the lead time as an endogenous stochastic variable has a substantial impact on safety stock. We numerically show that the exogenous lead time assumption may dramatically degrade customer service.Production/inventory systems; Base-stock replenishment policy; endogenous lead times; Safety stock; Phase-type distribution; Matrix-analytical methods;

A smoothing replenishment policy with endogenous lead times.

We consider a two echelon supply chain consisting of a single retailer and a single manufacturer. Inventory control policies at the retailer level often transmit customer demand variability to the manufacturer, sometimes even in an amplified form (known as the bullwhip effect). When the manufacturer produces in a make-to-order fashion though, he prefers a smooth order pattern. But dampening the variability in orders inflates the retailer's safety stock due to the increased variance of the retailers inventory levels. We can turn this issue of conflicting objectives into a win-win situation for both supply chain echelons when we treat the lead time as an endogenous variable. A less variable order pattern generates shorter and less variable (production/replenishment) lead times, introducing a compensating effect on the retailer's safety stock. We show that by including endogenous lead times, the order pattern can be smoothed to a considerable extent without increasing stock levels.Bullwhip effect; Demand; endogenous lead times; Fashion; Inventory; Inventory control; Markov processes; Order; Policy; Queueing; Research; Safety stock; Smoothing; Supply chain; Supply chain management; Time; Variability; Variance;

Coordination and synchronization of material flows in supply chains: an analytical approach.

The coordination of joint material flows is a key element in supply chain management. Although analytical models for the coordination of materials are of great practical value, literature analyzing them remains scarce. This article contributes to this gap by studying a generic supply chain model. The supply chain is assumed to have a single production facility that is supplied by two independent suppliers. The field of combinatorics serves as a means to derive exact results for important performance measures, and the results suggest insights related to several supply chain management principles.Assembly; Synchronization; Coordination; Supply chain; Combinatorics;

The impact of replenishment rules with endogenous lead times on supply chain performance..

In dit proefschrift beperken we ons tot een basis supply chain met één klant en één producent. We bestuderen verschillende bestelpolit ieken van de klant, en meten de impact van deze bestelregels op de produ ctie van de producent. We modelleren het productieproces als een wachtli jn- of queueing model. Uit de analyse van dit productiemodel vinden we de levertijden, die op hun beurt gebruikt worden in het voorra admodel van de klant. De methodologie die hiervoor gebruikt wordt, is tw eevoudig. Enerzijds maken we gebruik van statistische technieken om de v oorraad te beheren en bestellingen te plaatsen. Anderzijds maken we gebr uik van wachtlijntheorie en Markov ketens om de doorlooptijden te bepale n. Eerst onderzoeken we een eenvoudige "chase sales" bestelpolit iek: de klant plaatst elke periode een bestelling die gelijk is aan de c onsumentenvraag. We ontwikkelen een efficiënte procedure om de impact va n deze bestelregel op de doorlooptijden te berekenen op basis van

Analysis of decentralized production-inventory system

"November 22, 1999."Includes bibliographical references (p. 30-32).René Caldentey, Lawrence M. Wein

An enhanced approximation mathematical model inventorying items in a multi-echelon system under a continuous review policy with probabilistic demand and lead-time

An inventory system attempts to balance between overstock and understock to reduce the total cost and achieve customer demand in a timely manner. The inventory system is like a hidden entity in a supply chain, where a large complete network synchronizes a series of interrelated processes for a manufacturer, in order to transform raw materials into final products and distribute them to customers. The optimality of inventory and allocation policies in a supply chain for a cement industry is still unknown for many types of multi-echelon inventory systems. In multi-echelon networks, complexity exists when the inventory issues appear in multiple tiers and whose performances are significantly affected by the demand and lead-time. Hence, the objective of this research is to develop an enhanced approximation mathematical model in a multi-echelon inventory system under a continuous review policy subject to probabilistic demand and lead-time. The probability distribution function of demand during lead-time is established by developing a new Simulation Model of Demand During Lead-Time (SMDDL) using simulation procedures. The model is able to forecast future demand and demand during lead-time. The obtained demand during lead-time is used to develop a Serial Multi-echelon Inventory (SMEI) model by deriving the inventory cost function to compute performance measures of the cement inventory system. Based on the performance measures, a modified distribution multi-echelon inventory (DMEI) model with the First Come First Serve (FCFS) rule (DMEI-FCFS) is derived to determine the best expected waiting time and expected number of retailers in the system based on a mean arrival rate and a mean service rate. This research established five new distribution functions for the demand during lead-time. The distribution functions improve the performance measures, which contribute in reducing the expected waiting time in the system. Overall, the approximation model provides accurate time span to overcome shortage of cement inventory, which in turn fulfil customer satisfaction