Article ID: | iaor20112263 |
Volume: | 211 |
Issue: | 2 |
Start Page Number: | 274 |
End Page Number: | 281 |
Publication Date: | Jun 2011 |
Journal: | European Journal of Operational Research |
Authors: | Hayya Jack C, Harrison Terry P, He X James |
Keywords: | order review and release, uncertainty, variance reduction, lead time reduction |
We use exponential lead times to demonstrate that reducing mean lead time has a secondary reduction of the variance due to order crossover. The net effect is that of reducing the inventory cost, and if the reduction in inventory cost overrides the investment in lead time reduction, then the lead time reduction strategy would be tenable. We define