Improving Supply Chain Performance: Real-Time Demand Information And Flexible Deliveries
Source: Duke University (Fuqua-Global)
In some supply chains, materials are ordered periodically according to local information. This paper investigates how to improve the performance of such a supply chain. Specifically, the authors consider a serial inventory system in which each stage implements a local reorder interval policy; i.e., each stage orders up to a local basestock level according to a fixed-interval schedule. A fixed cost is incurred for placing an order. Two improvement strategies are considered: Firstly expanding the information flow by acquiring real-time demand information and secondly accelerating the material flow via flexible deliveries. The first strategy leads to a reorder interval policy with full information; the second strategy leads to a reorder point policy with local information.