Controlled partial shipments in two-echelon supply chain networks: A simulation study

In an uncoordinated supply chain network involving industrial buyers, the demand for an item on the vendor is often considerably lumpy, due to the independently derived buyer ordering policies. Thus, the latter's ability to make on-time deliveries becomes a critical issue, particularly near the end of its stock cycle or when several orders from different buyers arrive within a short interval of time. This paper suggests the notion of controlled partial-order shipments as a means of alleviating the ill effects of such sporadic demand patterns. Two simple techniques for formulating partial shipment policies are suggested in this study. The effectiveness of this notion is tested through a series of simulation experiments and it is shown that partial shipments can be a desirable way for improving eventual customer service at the retail level of a supply chain system.