Strategies for achieving customer order flexibility – supplier perspective

PurposeThe purpose of this study is to develop a framework of strategies to achieving customer order flexibility in and related to the order-to-delivery (OTD) process. The purpose is also to investigate how companies prioritize various strategies to achieve customer order flexibility.Design/methodology/approachBased on a literature review, pre-tests and conceptual reasoning, a conceptual framework of strategies related to the order-to-delivery process was developed. The strategies were linked to the order quantity and delivery lead-time flexibility dimensions. This structure resulted in six groups covering enabling as well as remedial strategies. An empirical interview study of ten customer–supplier relationships was conducted.FindingsThe interviews identified additional strategies, thereby expanding the framework. The enabling strategies with the highest median values were “have continuous contact with the customer's purchaser” and “use safety stock of raw materials/semi-finished products”. The remedial strategy with the highest median was “re-plan/re-prioritize the order backlog”. In the delivery sub-process, it was more common to apply remedial strategies for delivery lead-time than for order quantities.Research limitations/implicationsThe developed framework is a contribution to the literature on operational flexibility in and related to the OTD process. It complements existing knowledge by taking a supplier perspective.Practical implicationsSuppliers can use the framework as a tool to understand and systematically achieve better customer order flexibility in and related to the OTD process. Customers can use the framework as a checklist for supplier evaluation and supplier development.Originality/valueFew identified studies include empirical data on customer order flexibility.

An Optimized System to Reduce Procurement Risks and Stock-Outs: A Simulation Case Study for a Component Manufacturer

In the current global system; supply chains are at risk due to increasing procurement shortages, supply disruptions, and the reliability of on-time deliveries with the original order quantities. As a result, an anticipated management model is of vital importance to provide companies with the productive flexibility necessary to adapt quickly to supply changes, in order to ensure the quality and delivery time through efficient management of stocks and supply costs. In this context, this research aims to develop a system to complement classical procurement planning based on inventory management methods and MRP (material requirements planning) systems by considering suppliers’ behavior regarding procurement risks. For this purpose, a system is developed that seeks to simulate the impacts of procurement shortages of different natures. Moreover, the research investigates the development of a system that performs procurement planning of a component manufacturer to determine the supply orders necessary to meet the master production schedule. The system is analyzed based on a set of indicators in the event that the supplier of a material needed for production does not supply on time or has short-term problems. Several scenarios are simulated, and the results are quantified by changing the procurement order quantities, which may or may not follow the economic order quantity (EOQ) model, and the potential procurement disruptions or shortages. The results show how the simulation and anticipation of potential suppliers’ procurement behavior concerning potential shortages and their probability are key for successful procurement within a joint strategy with classical procurement methods.

A single-manufacturer multi-retailer integrated inventory model for items with imperfect quality, price sensitive demand and planned back orders

In this paper, we develop an integrated two-echelon supply chain inventory model with a single-manufacturer and multi-retailers in which each retailer’s demand is dependent on selling price of the product. The manufacturer produces a single product and dispatched the order quantities of the retailers in some equal batches. The production process is imperfect and produces imperfect quality of products with a defective percentage which is random in nature and follows binomial distribution. Inspection process is performed by the retailers to classify the defective items in each lot delivered from the manufacturer. The defective items that were found by the retailer will be returned to the manufacturer at the next delivery. Lead time is random and it follows an exponential distribution. We also assume that shortages are allowed and are completely backlogged at each retailer’s end. A closed form solution to maximize the expected average profit for both the centralized and the decentralized scenarios are obtained. The developed models are illustrated with the help of some numerical examples using stochastic search genetic algorithm (GA). It is found that integration of the supply chain players results an impressive increment in the profit of the whole supply chain. Sensitivity analysis is also performed to explore the impacts of key-model parameters on the expected average profit of the supply chain.

Measuring How Decision Support Systems Improve Newsvendors’ Performance: The Subjects’ Version

Despite the emerging contribution of machine automation, artificial intelligence and information systems, humans remain yet the most fragile ring of any organization. Decision support systems are widespread, supporting us to decide among uncertainties, such as weather conditions, suppliers’ performances and financial opportunities, but how humans take into account this information and, most of all, how they trust their own management knowledge is a controversial issue. This paper assesses, by means of a controlled experiment and ex post interviews, how individuals consider and use decision support systems in the context of the Newsvendor Problem. In accordance with prior research, the results show that individuals’ order quantities are pull-to-center biased. Moreover, ex post direct interviews suggest that (i) the individuals’ trust in decision support systems is not blind; (ii) individuals do not play the business game as a real task, (iii) they are biased by the type of incentive promised and (iv) they seem not skilled or trained enough. Ex post interviews shed a new light on controlled human experiments: they should be better analyzed and re-engineered.

Inventory models with integrated time dependent demands for deteriorating items – in third and fourth order equations.

. Inventory models with integrated time-dependent demands for deteriorative items are considered in this study. The demand models found in the literature include constant, linear, quadratic, exponential, price dependent, and stock dependent among others. To wit, no study exists that uses integrated time-dependent demands. Three models are developed: The first model uses continuously compounded demands, the second model uses linear demands integrated with continuously compounded demands, and the third model uses quadratic demands integrated with continuously compounded demands. Mathematical models are delineated for each model and relevant examples are provided to elucidate the proposed procedure. The objective herein is to obtain optimum order quantities and order intervals concerning the overall cost. Sensitivity analysis is provided for each of the three models. The necessary data was generated using Visual Basic 6.0.. Inventory models with integrated time-dependent demands for deteriorative items are considered in this study. The demand models found in the literature include constant, linear, quadratic, exponential, price dependent, and stock dependent among others. To wit, no study exists that uses integrated time-dependent demands. Three models are developed: The first model uses continuously compounded demands, the second model uses linear demands integrated with continuously compounded demands, and the third model uses quadratic demands integrated with continuously compounded demands. Mathematical models are delineated for each model and relevant examples are provided to elucidate the proposed procedure. The objective herein is to obtain optimum order quantities and order intervals concerning the overall cost. Sensitivity analysis is provided for each of the three models. The necessary data was generated using Visual Basic 6.0.

Multi-objective vendor managed inventory system with interval type-2 fuzzy demand and order quantities

PurposeThe proposed IT2FMOVMI model intends to concurrently minimize total cost and warehouse space for the single vendor-retailer, multi-item and a consolidated vendor store. Regarding demand and order quantities with the deterministic and type-1 fuzzy numbers, we have also formulated the classic/crisp MOVMI model and type-1 fuzzy MOVMI (T1FMOVMI) model. The suggested solution technique can solve both crisp MOVMI and T1FMOVMI problems. By finding the optimal ordered quantities and backorder levels, the Pareto-fronts are constructed to form the solution sets for the three models.Design/methodology/approachA multi-objective vendor managed inventory (MOVMI) is the most recognized marketing and delivery technique for the service provider and the retail in the supply chain in Industry 4.0. Due to the evolving market conditions, the characteristics of the individual product, the delivery period and the manufacturing costs, the demand rate and order quantity of the MOVMI device are highly unpredictable. In such a scenario, a MOVMI system with a deterministic demand rate and order quantity cannot be designed to estimate the highly unforeseen cost of the problem. This paper introduces a novel interval type-2 fuzzy multi-objective vendor managed inventory (IT2FMOVMI) system, which uses interval type-2 fuzzy numbers (IT2FNs) to represent demand rate and order quantities. As the model is an NP-hard, the well-known meta-heuristic algorithm named NSGA-II (Non-dominated sorted genetic algorithm-II) with EKM (Enhanced Karnink-Mendel) algorithm based solution method has been established.FindingsThe experimental simulations for the five test problems that demonstrated distinct conditions are considered from the real-datasets of SAPCO company. Experimental study concludes that T1FMOVMI and crisp MOVMI schemes are outclassed by IT2FMOVMI model, offering more accurate Pareto-Fronts and efficiency measurement values.Originality/valueUsing fuzzy sets theory, a significant amount of work has been already done in past decades from various points of views to model the MOVMI. However, this is the very first attempt to introduce type-2 fuzzy modelling for the problem to address the realistic implementation of the imprecise parameters.

Coordinating a three level supply chain with multiple retailers

The objective of this research is to highlight the factors that can optimize the total cost of a centralized supply chain through coordination of order quantities amongst the players in a supply chain. Survey of earlier research reveals that players in a supply chain usually have conflicting interests, such as reducing inventories and increasing profitability. Thus, to make coordination feasible, it is essential to provide proper incentives to individual players. Munson and Rosenblatt (2001) were the first to discuss coordination in a three level supply chain with a single player at each level. On the other hand, Viswanathan and Piplani (2001) are believed to be the first to consider cooordination in a two level supply chain with a single vendor and multiple retailers. This research extends upon these works by investigating coordination in a three level supply chain with multiple retailers. This is done by incorporating the model of Viswanathan and Piplani (2001) into that of Munson and Rosenblatt (2001). A new mathematical model is developed, with numerical examples presented and results discussed. When players in a supply chain agree to coordinate, it is possible to have some of the players benefiting more than others in the chain, if not losing. The mathematical model developed in this research work guarantees that the local costs for the players either remain the same as before coordination, or decrease as a result of coordination. Furthermore, this research work assumes that savings generated from coordination should be distributed among the players of the chain. This led to developing a scheme to fairly distribute savings amongst the players of the supply chain. Results indicate that even though players may have conflicting interests in the supply chain, coordination is recommended and should be pursued.

Coordinating a three level supply chain with multiple retailers

The objective of this research is to highlight the factors that can optimize the total cost of a centralized supply chain through coordination of order quantities amongst the players in a supply chain. Survey of earlier research reveals that players in a supply chain usually have conflicting interests, such as reducing inventories and increasing profitability. Thus, to make coordination feasible, it is essential to provide proper incentives to individual players. Munson and Rosenblatt (2001) were the first to discuss coordination in a three level supply chain with a single player at each level. On the other hand, Viswanathan and Piplani (2001) are believed to be the first to consider cooordination in a two level supply chain with a single vendor and multiple retailers. This research extends upon these works by investigating coordination in a three level supply chain with multiple retailers. This is done by incorporating the model of Viswanathan and Piplani (2001) into that of Munson and Rosenblatt (2001). A new mathematical model is developed, with numerical examples presented and results discussed. When players in a supply chain agree to coordinate, it is possible to have some of the players benefiting more than others in the chain, if not losing. The mathematical model developed in this research work guarantees that the local costs for the players either remain the same as before coordination, or decrease as a result of coordination. Furthermore, this research work assumes that savings generated from coordination should be distributed among the players of the chain. This led to developing a scheme to fairly distribute savings amongst the players of the supply chain. Results indicate that even though players may have conflicting interests in the supply chain, coordination is recommended and should be pursued.