scholarly journals The impact of inventory holding costs on the strategic design of supply chains

2020 ◽  
Author(s):  
Liliana Bolaños-Zúñiga ◽  
Carlos Julio Vidal-Holguin
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Inventory Control ◽  
Potential Functions ◽  
Supply Chain Optimization ◽  
Holding Costs ◽  
Inventory Costs ◽  
Strategic Design ◽  
Supply Chain Configuration ◽  
Inventory Holding

The explicit consideration of inventory holding costs for the strategic design of supply chains has not been sufficiently addressed in scientific literature. A possible cause is that usually supply chain optimization models are deterministic and linear or mixed-integer linear, while forecasting methods and inventory control systems are stochastic and non-linear. It is clear, however, that inventory costs might have a significant impact on optimal supply chain configuration and on distribution systems expansion or contraction. This article presents a practical strategy that considers an item-by-item inventory control system by means of a Monte Carlo simulation model as a starting point to include inventory holding costs in a supply chain optimization model. Three strategies to include inventory costs in the objective function were analyzed: The Square Root Law (SRL), the potential functions that relate average inventory with warehouse throughput, and the estimation of average inventories by simulation. The results suggest that the SRL should not be used unless unusual assumptions hold and that potential functions are a very good approximation to consider inventory costs for supply chain configuration.

Operational challenges during a pandemic: an investigation in the electronics industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sanjoy Kumar Paul ◽  
Priyabrata Chowdhury ◽  
Md. Tarek Chowdhury ◽  
Ripon Kumar Chakrabortty ◽  
Md. Abdul Moktadir
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Inventory Management ◽  
Demand Management ◽  
Electronics Industry ◽  
Content Type ◽  
Holding Costs ◽  
Inventory Holding ◽  
Practical Implications

PurposeThe recent coronavirus disease 2019 (COVID-19) pandemic poses numerous challenges to supply chains. This pandemic is quite unique when compared to previous epidemic disruptions and has had a severe impact on supply chains. As a result, the operational challenges (OCs) caused by COVID-19 are still unknown among practitioners and academics. It is critical to comprehensively document current OCs so that firms can plan and implement strategies to overcome them. Consequently, this study systematically identifies and ranks COVID-19-related OCs.Design/methodology/approachThis study uses an integrated methodology combining expert interviews and the best-worst method (BWM) to analyze the results. The data have been collected from the electronics industry of Bangladesh, an emerging economy. This study also conducts a sensitivity analysis to check the robustness of the results.FindingsThe results reveal 23 COVID-19-related OCs under five categories: sourcing, production and inventory management, demand management and distribution, return management and after-sales service, and supply chain-wide challenges. The quantitative investigation reveals that overstock in finished goods inventory, low end-customer demands, order cancellations from dealers and retailers, high inventory holding costs and lack of transportation are the top five OCs.Practical implicationsThe findings will help practitioners to understand the OCs and allow them to prepare for future major disruptions and formulate long-term strategies for operations during and after the COVID-19 pandemic.Originality/valueThis study contributes to the literature on supply chain complexity and challenges by considering a major pandemic outbreak. Moreover, the study also contributes to the knowledge on emerging economies, which have been largely neglected in the current literature.

Strategic Inventories Under Supply Chain Competition

2021 ◽  
Author(s):  
Xi Li ◽  
Yanzhi Li ◽  
Ying-Ju Chen
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Distribution Channel ◽  
Problem Definition ◽  
Supply Chain Competition ◽  
Managerial Implications ◽  
Holding Cost ◽  
Inventory Holding ◽  
Period Model

Problem definition: We consider the effects of strategic inventory (SI) in the presence of chain-to-chain competition in a two-period model. Academic/practical relevance: Established findings suggest that SI may alleviate double marginalization and improve the efficiency of a decentralized distribution channel. However, no studies consider the role of SI under chain-to-chain competition. Methodology: We build a two-period model consisting of two competing supply chains, each with an upstream manufacturer and an exclusive retailer. The retailers compete on either price or quantity. We characterize the firms’ strategies under the concept of perfect Bayesian equilibrium. We consider cases where contracts are either observable or unobservable across supply chains. Results: (1) SI still exists under chain-to-chain competition. Retailers may carry more inventory when the competition becomes fiercer, which further intensifies the supply chain competition. (2) Different from the existing findings, SI may backfire and hurt all firms. Interestingly, firms may benefit from a higher inventory holding cost. (3) Under supply chain competition, the prisoner’s dilemma can arise if competition intensity is intermediate; in other words, manufacturers are better off without strategic inventory, and yet they cannot help allowing strategic inventory, which is the unique equilibrium. Managerial implications: Despite its appeal among firms of a single supply chain, the role of SI is altered or even reversed by chain-to-chain competition. Conventional wisdom on SI should be applied with caution.

Modeling Closed Loop Supply Chain Systems

2012 ◽  
pp. 313-342
Author(s):  
Roberto Poles
Keyword(s):  
Supply Chain ◽  
System Dynamics ◽  
Supply Chains ◽  
Inventory Control ◽  
Production Planning ◽  
Closed Loop ◽  
Economic Benefits ◽  
Reverse Supply Chain ◽  
Closed Loop Supply Chains ◽  
Operational Processes

In the past, many companies were concerned with managing activities primarily along the traditional supply chain to optimize operational processes and thereby economic benefits, without considering new economic or environmental opportunities in relation to the reverse supply chain and the use of used or reclaimed products. In contrast, companies are now showing increased interest in reverse logistics and closed loop supply chains (CLSCs) and their economic benefits and environmental impacts. In this chapter, our focus is the study of remanufacturing activity, which is one of the main recovery methods applied to closed loop supply chains. Specifically, the authors investigate and evaluate strategies for effective management of inventory control and production planning of a remanufacturing system. To pursue this objective, they model a production and inventory system for remanufacturing using the System Dynamics (SD) simulation modeling approach. The authors primary interest is in the returns process of such a system. Case studies will be referred to in this chapter to support some of the findings and to further validate the developed model.

scholarly journals Optimizing Resource Utilization in Biomass Supply Chains by Creating Integrated Biomass Logistics Centers

Energies ◽  
2020 ◽  
Vol 13 (22) ◽  
pp. 6153
Author(s):  
Xuezhen Guo ◽  
Juliën Voogt ◽  
Bert Annevelink ◽  
Joost Snels ◽  
Argyris Kanellopoulos
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Resource Utilization ◽  
Optimization Model ◽  
Biobased Products ◽  
Knowledge Gap ◽  
Supply Chain Optimization ◽  
Biomass Logistics ◽  
Idle Capacity

Bio-based supply chains are by nature complex to optimize. The new logistic concept of integrated biomass logistical center (IBLC) provides us the opportunity to make full use of the idle capacity for a food/feed plant to produce biobased products so that the entire chain efficiency can be improved. Although research has been conducted to analyze the IBLC concept, is yet to be an optimization model that can optimally arrange the activities in the supply chain where an IBLC stands in the middle. To fill the knowledge gap in the literature, this paper makes the first step to develop a MILP model that enables biobased supply chain optimization with the IBLC concept, which supports logistic and processing decisions in the chain. The model is applied in a case study for a feed and fodder plant in Spain where managerial insights have been derived for transferring the plant to a profitable IBLC.

Complexity Analysis of Assembly Supply Chain Configurations

2008 ◽  
Author(s):  
Hui Wang ◽  
Xiaowei Zhu ◽  
S. Jack Hu ◽  
Yoram Koren
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Mass Customization ◽  
Analytical Study ◽  
Complexity Analysis ◽  
Product Variety ◽  
Entropy Theory ◽  
Modular Assembly ◽  
Supply Chain Configuration ◽  
Assembly Constraints

This paper studies the complexity of assembly supply chains in mass customization environment. The high product variety from mass customization increases the complexity of assembly supply chains. The paper identifies the factors causing supply chain complexity and defines a complexity measure of an assembly supply chain based on these factors and the information entropy theory. Algorithms that determine the optimal supply chain configuration are developed to minimize the supply chain complexity (without and with assembly constraints). This analytical study of supply chain complexity will generate new insights on the influence of product variety on supply chains performance in mass customization. The model and algorithms developed in this paper can assist in making decisions such as when and how to implement a modular assembly supply chain and how much variety should be economically offered.

Supply Chain Optimization Audit (SCOA) for Green ICT Opportunities

2011 ◽  
pp. 559-580 ◽  
Author(s):  
Saugato Mukerji ◽  
Aditya K. Ghose
Keyword(s):  
Energy Efficiency ◽  
Supply Chain ◽  
Supply Chains ◽  
Energy Saving ◽  
Air Conditioning ◽  
Data Centers ◽  
Supply Chain Optimization ◽  
Green Ict

Green ICT is a lot more than efficient air-conditioning of data centers and switching off monitors and desktop PCs. ICT has the ability to give rise to and continuously enable energy saving on a scale 50 to 100 times bigger by becoming the technology that detects and prevents process inefficiency of energy intensive supply chains. Energy efficiency that can only be sustainably achieved as a result of using ICT creatively is outlined in this chapter. The authors consider the optimization of supply chain as a crucial enabler of the overall effort of an organization to improve its environmental credentials. Therefore, undertaking the audits of an organization’s supply chains, and ensuring that the end result improves its efficiency is one way of limiting the carbon generated during its activities.

MATHEMATICAL MODEL FOR INVENTORY CONTROL PROBLEM USING IMPRECISE PARAMETERS

2018 ◽  
Vol 6 (2) ◽  
pp. 07-12
Author(s):  
Neha Kumari ◽  
Manoj Kumar Mandal ◽  
Arun Prasad Burnwal
Keyword(s):  
Control Problem ◽  
Inventory Control ◽  
Geometric Programming ◽  
Programming Model ◽  
Holding Costs ◽  
Fuzzy Membership Functions ◽  
Inventory Control Problem ◽  
Set Up ◽  
Inventory Holding ◽  
Imprecise Parameters

In this paper, an inventory control problem is discussed using imprecise parameters. The fusion of geometric programming and fuzzy logic is used as imprecise parameters to solve inventory control problems. In inventory, holding costs, set-up costs, etc. may be flexible due to vague information. Fuzzy set theory is used to convert the inventory model crisp to fuzzy for producing flexible output. Compensatory operator is used to aggregate the fuzzy membership functions corresponding to fuzzy sets for fuzzy objectives and constraints. This aggregation gives the overall achievement function and the model known as fuzzy geometric programming model.  

Evaluating the Modern Airlines Maintenance Parts Supply Chain Reliability and Effectiveness

2018 ◽  
Vol 3 (03) ◽  
Author(s):  
Surya Lokesh Bhargav Pentakota ◽  
Pranusha Chalasani ◽  
Sai Krishna Mekala ◽  
Samuel I Okate
Keyword(s):  
Sensitivity Analysis ◽  
Supply Chain ◽  
Supply Chains ◽  
Inventory Control ◽  
Analytical Model ◽  
Cost Reduction ◽  
Contextual Analysis ◽  
Rfid System ◽  
Support Organizations ◽  
The Cost

The estimation of RFID in the support of supply chains of aircraft parts is of growing interest and is analyzed, especially in the proposed analytical model of this paper. This model helps us pick up a superior comprehension of the connections between different expenses brought about and the RFID impact on an aircraft support following procedure. Utilizing a RFID system, the company specialized in aircraft parts can accumulate savings. For this we need to consider that technology can remove inaccuracy in inventory delays brought about by mishandling in the component repair. This contextual analysis represents wonder through the utilization of numerical suppositions, highlighting the advantages of RFID. Furthermore, the estimation of RFID in aircraft maintenance is assessed utilizing sensitivity analysis, as per the parameters of the model of expense decreases in misusing repair parts and inventory control. The discoveries support the industry acceptance of RFID innovation, demonstrating that this is beneficial to support organizations of aircraft parts. Finally, in this paper we are considering the mishandling of the damaged parts of the air craft and also the cost reduction and the mishandling of the inventory parts. A sensitivity analysis is also carried out for the parameters that are used for the decrease in the utilizing the parts, cost reduction and the inventory control.

Evaluating the Modern Airlines Maintenance Parts Supply Chain Reliability and Effectiveness

2018 ◽  
Vol 1 (01) ◽  
Author(s):  
Surya Lokesh Bhargav Pentakota ◽  
Pranusha Chalasani ◽  
Sai Krishna Mekala ◽  
Samuel I Okate
Keyword(s):  
Sensitivity Analysis ◽  
Supply Chain ◽  
Supply Chains ◽  
Inventory Control ◽  
Analytical Model ◽  
Cost Reduction ◽  
Contextual Analysis ◽  
Rfid System ◽  
Support Organizations ◽  
The Cost

The estimation of RFID in the support of supply chains of aircraft parts is of growing interest and is analyzed, especially in the proposed analytical model of this paper. This model helps us pick up a superior comprehension of the connections between different expenses brought about and the RFID impact on an aircraft support following procedure. Utilizing a RFID system, the company specialized in aircraft parts can accumulate savings. For this we need to consider that technology can remove inaccuracy in inventory delays brought about by mishandling in the component repair. This contextual analysis represents wonder through the utilization of numerical suppositions, highlighting the advantages of RFID. Furthermore, the estimation of RFID in aircraft maintenance is assessed utilizing sensitivity analysis, as per the parameters of the model of expense decreases in misusing repair parts and inventory control. The discoveries support the industry acceptance of RFID innovation, demonstrating that this is beneficial to support organizations of aircraft parts. Finally, in this paper we are considering the mishandling of the damaged parts of the air craft and also the cost reduction and the mishandling of the inventory parts. A sensitivity analysis is also carried out for the parameters that are used for the decrease in the utilizing the parts, cost reduction and the inventory control.

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