Effects of inventory policy on supply chain performance: A simulation study of critical decision parameters
This paper investigates the effects of information sharing and early order commitment on the performance of four inventory policies used by retailers in a supply chain of one capacitated supplier and four retailers. Model parameters and operating conditions are emulated from a local business supplyi...
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Veröffentlicht in: | Computers & industrial engineering 2008-10, Vol.55 (3), p.620-633 |
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description | This paper investigates the effects of information sharing and early order commitment on the performance of four inventory policies used by retailers in a supply chain of one capacitated supplier and four retailers. Model parameters and operating conditions are emulated from a local business supplying a standard product to its retailers. Through computer simulation and subsequent analyses, we found that the inventory policy used by the retailers, information sharing, and early order commitment can significantly influence the performance of the supply chain. Out of the four inventory policies examined, the economic order quantity rule is found to be the best for the retailers and the entire supply chain, but periodic order quantity and Silver–Meal provide the best performance for the supplier. The sharing of future order plans by the retailer and the supplier is also shown to be the most effective way for reducing the supplier’s cost and improving its service level; however, the magnitude of these benefits achieved is less for the retailers. In addition, early order commitment by the retailers is found to be beneficial to the supplier and retailers in reducing their total cost. |
doi_str_mv | 10.1016/j.cie.2008.02.002 |
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Model parameters and operating conditions are emulated from a local business supplying a standard product to its retailers. Through computer simulation and subsequent analyses, we found that the inventory policy used by the retailers, information sharing, and early order commitment can significantly influence the performance of the supply chain. Out of the four inventory policies examined, the economic order quantity rule is found to be the best for the retailers and the entire supply chain, but periodic order quantity and Silver–Meal provide the best performance for the supplier. The sharing of future order plans by the retailer and the supplier is also shown to be the most effective way for reducing the supplier’s cost and improving its service level; however, the magnitude of these benefits achieved is less for the retailers. In addition, early order commitment by the retailers is found to be beneficial to the supplier and retailers in reducing their total cost.</description><identifier>ISSN: 0360-8352</identifier><identifier>EISSN: 1879-0550</identifier><identifier>DOI: 10.1016/j.cie.2008.02.002</identifier><identifier>CODEN: CINDDL</identifier><language>eng</language><publisher>New York: Elsevier Ltd</publisher><subject>Computer simulation ; Early order commitment ; Impact analysis ; Information sharing ; Inventory ; Inventory policy ; Order quantity ; Studies ; Suppliers ; Supply chain management ; Supply chains</subject><ispartof>Computers & industrial engineering, 2008-10, Vol.55 (3), p.620-633</ispartof><rights>2008 Elsevier Ltd</rights><rights>Copyright Pergamon Press Inc. 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Model parameters and operating conditions are emulated from a local business supplying a standard product to its retailers. Through computer simulation and subsequent analyses, we found that the inventory policy used by the retailers, information sharing, and early order commitment can significantly influence the performance of the supply chain. Out of the four inventory policies examined, the economic order quantity rule is found to be the best for the retailers and the entire supply chain, but periodic order quantity and Silver–Meal provide the best performance for the supplier. The sharing of future order plans by the retailer and the supplier is also shown to be the most effective way for reducing the supplier’s cost and improving its service level; however, the magnitude of these benefits achieved is less for the retailers. In addition, early order commitment by the retailers is found to be beneficial to the supplier and retailers in reducing their total cost.</description><subject>Computer simulation</subject><subject>Early order commitment</subject><subject>Impact analysis</subject><subject>Information sharing</subject><subject>Inventory</subject><subject>Inventory policy</subject><subject>Order quantity</subject><subject>Studies</subject><subject>Suppliers</subject><subject>Supply chain management</subject><subject>Supply chains</subject><issn>0360-8352</issn><issn>1879-0550</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2008</creationdate><recordtype>article</recordtype><recordid>eNp9kLtOxDAQRS0EEsvjA-gsCrqEsb3OAyqEeEkr0UBteZ2x8JLEwU6Q8vc4WioKqinm3KuZQ8gFg5wBK653uXGYc4AqB54D8AOyYlVZZyAlHJIViAKySkh-TE5i3AHAWtZsRT4frEUzRuotdf039qMPMx1868xMfU_jNAztTM2Hdj0dMFgfOt0bvKF3NLpuavXoFmycmnnpMMGNzuiWNmhcXFaDDrrDEUM8I0dWtxHPf-cpeX98eLt_zjavTy_3d5vMCCnHTBjQjDcGOa856Bq3nJmq4aXU9boothK3pZHbUsqyqiQiWNEw4NZyLrmp1uKUXO17h-C_Joyj6lw02La6Rz9FJaSQrCxFAi__gDs_hT7dpjgT5boqoE4Q20Mm-BgDWjUE1-kwKwZqca92KrlXi3sFXCX3KXO7z2B689thUDEhSVvjQrKtGu_-Sf8AGcuNMw</recordid><startdate>20081001</startdate><enddate>20081001</enddate><creator>Lau, R.S.M.</creator><creator>Xie, Jinxing</creator><creator>Zhao, Xiande</creator><general>Elsevier Ltd</general><general>Pergamon Press Inc</general><scope>AAYXX</scope><scope>CITATION</scope><scope>7SC</scope><scope>8FD</scope><scope>JQ2</scope><scope>L7M</scope><scope>L~C</scope><scope>L~D</scope></search><sort><creationdate>20081001</creationdate><title>Effects of inventory policy on supply chain performance: A simulation study of critical decision parameters</title><author>Lau, R.S.M. ; Xie, Jinxing ; Zhao, Xiande</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c355t-3c0a12dce22920a9eb21c8d275a9466b5eb7c5b7557885ee0f3d102ff2252c843</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2008</creationdate><topic>Computer simulation</topic><topic>Early order commitment</topic><topic>Impact analysis</topic><topic>Information sharing</topic><topic>Inventory</topic><topic>Inventory policy</topic><topic>Order quantity</topic><topic>Studies</topic><topic>Suppliers</topic><topic>Supply chain management</topic><topic>Supply chains</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Lau, R.S.M.</creatorcontrib><creatorcontrib>Xie, Jinxing</creatorcontrib><creatorcontrib>Zhao, Xiande</creatorcontrib><collection>CrossRef</collection><collection>Computer and Information Systems Abstracts</collection><collection>Technology Research Database</collection><collection>ProQuest Computer Science Collection</collection><collection>Advanced Technologies Database with Aerospace</collection><collection>Computer and Information Systems Abstracts Academic</collection><collection>Computer and Information Systems Abstracts Professional</collection><jtitle>Computers & industrial engineering</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Lau, R.S.M.</au><au>Xie, Jinxing</au><au>Zhao, Xiande</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Effects of inventory policy on supply chain performance: A simulation study of critical decision parameters</atitle><jtitle>Computers & industrial engineering</jtitle><date>2008-10-01</date><risdate>2008</risdate><volume>55</volume><issue>3</issue><spage>620</spage><epage>633</epage><pages>620-633</pages><issn>0360-8352</issn><eissn>1879-0550</eissn><coden>CINDDL</coden><abstract>This paper investigates the effects of information sharing and early order commitment on the performance of four inventory policies used by retailers in a supply chain of one capacitated supplier and four retailers. Model parameters and operating conditions are emulated from a local business supplying a standard product to its retailers. Through computer simulation and subsequent analyses, we found that the inventory policy used by the retailers, information sharing, and early order commitment can significantly influence the performance of the supply chain. Out of the four inventory policies examined, the economic order quantity rule is found to be the best for the retailers and the entire supply chain, but periodic order quantity and Silver–Meal provide the best performance for the supplier. The sharing of future order plans by the retailer and the supplier is also shown to be the most effective way for reducing the supplier’s cost and improving its service level; however, the magnitude of these benefits achieved is less for the retailers. 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subjects | Computer simulation Early order commitment Impact analysis Information sharing Inventory Inventory policy Order quantity Studies Suppliers Supply chain management Supply chains |
title | Effects of inventory policy on supply chain performance: A simulation study of critical decision parameters |
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