Article ID: | iaor1994511 |
Country: | United Kingdom |
Volume: | 44 |
Issue: | 7 |
Start Page Number: | 637 |
End Page Number: | 644 |
Publication Date: | Jul 1993 |
Journal: | Journal of the Operational Research Society |
Authors: | Vasko F.J., Newhart D.D., Stott K.L. |
Keywords: | distribution, manufacturing industries, inventory |
The optimal design of a supply chain was approached in two phases by using: (1) a mathematical programming formulation and heuristic solution approach to minimize the distinct number of product types held at various points in the supply chain; and (2) a spreadsheet inventory model to estimate the safety stock needed to absorb random fluctuations in both demand and lead time throughout the system. This two-phased approach allowed management to quantify the effects of inventory required for locating parts of the supply chain in different geographic areas. The quantification of projected inventory requirements was a critical input used by senior management to clarify their final decision-making process.