Implications of inbound lead time variability for Just-in-Time manufacturing

This article provides a discussion of key components for the decisionmaker concerned with the logistical issues of implementing a Just-in-Time (JIT) manufacturing philosophy. A JIT philosophy promotes reduced cycle times that provide benefits not normally considered in traditional inventory models and presents new concerns for the purchasing and logistics functions. The ramifications are investigated of a JIT implementation using an inventory-theoretic modelling procedure modified and expanded to incorporate these considerations. The resulting cost comparisons indicate that the lead time variability associated with uncertain transit times in JIT is critical in the determination of order cycle time, order point, safety stock and the holding cost of the safety stock.