A study on the cost of operational complexity in customer–supplier systems

A study on the cost of operational complexity in customer–supplier systems

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Article ID: iaor20081756
Country: Netherlands
Volume: 106
Issue: 1
Start Page Number: 217
End Page Number: 229
Publication Date: Jan 2007
Journal: International Journal of Production Economics
Authors: , ,
Keywords: simulation: applications, measurement
Abstract:

This paper reports on the application of the operational complexity index. The aim is to address what is the relationship between costs and the complexity index. The investigation carried out measurements on two types of supplier–customer systems in the UK. One is make-to-stock with low product variety but high volume, while the second is make-to-order with high variety but low volume. The research found some evidence that inventory costs are associated with operational complexity. Moreover, while the index is generic to both case studies, there seemed to be a direct link between the index value and cost only in the make-to-stock case.

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