Slides Flashcards
...
Motivations for holding inventory
demand uncertainty economies of scale speculation smoothing cost control transportation benefits
Types of inventory
cycle inventory
pipeline inventory
safety stock
supply chain coordination
each firm’s objective becomes aligned with the SC’s objective so optimal performance is achieved
why coordinate supply chain
conflicting objectives
strong firms push risk onto SC partners
align optimization action
make pie bigger
push wholesale
higher w better for SC
pull wholesale
lower w better for SC
risk sharing contracts (product)
buyback (predictable demand)
revenue sharing (short peak demand)
sales rebate
factors influencing transportation mode choice
demand uncertainty lead time uncertainty reliability environmental impact type of product SC strategy
design options for transportation network
direct shipment to single destination direct shipment with milk runs shipping via intermediate DC shipping via DC using milk runs shipping via central DC with cross-docking tailored network
inventory aggregation implications & used when
lower ss
higher transportation costs
used when:
inventory & facility cost large fraction of SC costs
products with large value-to-weight ratio
products with high demand uncertainty
conditions inventory aggregation
low transport cost
high demand uncertainty
high holding cost
postponement
point of differentiation is delayed as much as possible
risk pooling
lower SS
moves SS-CSL curve to more efficient level
When postponement is appropriate
high uncertainty in demand mix Long lead times short product life cycle high inventory / stock out costs customization not too costly low variable cost of differentiating components
To avoid risk, SC that is:
Robust
Reliable
Resilient
SC trends that imply more risk
JIT & Lean practices
economies of scale
cost reduction
outsourcing
