You are here

Determining supply chain safety stock level and location

Journal Name:

Publication Year:

Keywords (Original Language):

Abstract (Original Language): 
Purpose: The lean methodology and its principles have widely been applied in supply chain management in recent decades. Manufacturers are one of the most important contributors in a supply chain and inventory plays a paramount role for them to become lean. Therefore, there should be appropriate management of inventory and all of its drivers in accordance with a lean strategy. Safety stock is one of the main drivers of inventory; it protects against increasing the stretch in the breaking points of the supply chain, which in turn can result in possible reduction of inventory. In this paper an optimization model and a simulation model are developed and applied in a real case to optimize the safety stock level with the objective of logistics cost minimization. Design/methodology/approach: In order to optimize the safety stock level while minimizing logistics costs, a nonlinear cost minimization safety stock model is developed in this paper and then it is applied in a real world manufacturing case company. A safety stock simulation model based on appropriate metrics in the case company’s supply chain performance is also provided. Findings: These models result in not only the optimum levels but also locations of safety stock within the supply chain. Originality/value: In this research, two models of cost minimization and simulation have been developed and also applied in a real case company to result in not only optimized levels but also optimized locations of safety stock across the whole supply chain. In addition, the appropriate supply chain performance measurement metrics have been introduced in this paper and the simulation model is developed based on those.
42
71

REFERENCES

References: 

Adamides, E.D., Karacapilidis, N., Pylarinou, H., & Koumanakos, D. (2008). Supporting
collaboration in the development and management of lean supply networks. Production
Planning & Control, 19(1), 35-52. http://dx.doi.org/10.1080/09537280701773955
Aleotti Maia, L.O., & Qassim, R.Y. (1998). Minimum cost safety stocks for frequently delivery
manufacturing. International Journal of Production Economics, 233-236.
Cagliano, R., Caniato, F., & Spina, G. (2004). Lean, Agile and traditional supply: how do they
impact manufacturing performance? Journal of Purchasing & Supply Management, 10,
151-164. http://dx.doi.org/10.1016/j.pursup.2004.11.001
Chen, I.J., & Paulraj, A. (2004). Understanding supply cahin management: critical research
and theoretical framework. International Journal of Production Research, 42(1), 131-163.
http://dx.doi.org/10.1080/00207540310001602865
Chun Wu, Y. (2003). Lean manufacturing: a perspective of lean suppliers. International Journal
of Operations & Production Management, 23(11), 1349-1376.
http://dx.doi.org/10.1108/01443570310501880
Coyle, J.J., Bardi, E.J., & Langley, C.J. (2009). Supply chain management: a logistics
perspective.
Crino, S.T., McCarthy, D.J., & Carier, J.D. (2007). Lean Six Sigma for supply chain management
as applied to the Army Rapid Fielding Initiative. In 1st Annual IEEE Systems Conference.
Desmet, B., Aghezzaf, E.H., & Vanmaele, H. (2010). A normal approximation for safety stock
optimization in a two-echelon distribution system. Journal of the Operational Research
Society, 61(1), 156-163. http://dx.doi.org/10.1057/jors.2008.150
De Toni, A., & Tonchia, S. (2001). Performance measurement systems: Models, characteristics
and measures. International Journal of Operations & Production Management, 21, 46-70.
http://dx.doi.org/10.1108/01443570110358459
Graves, S.C., & Rinnooy Kan, A.H.G. (1993). Logistics of production and inventory. Handbooks
in Operations Research and Management Science.
Gunasekaran, A., Patel, C., & McGaughey, R.E. (2004). A framework for supply chain
performance measurement. International Journal of Production Economics, 87, 333-347.
http://dx.doi.org/10.1016/j.ijpe.2003.08.003
Gunasekaran, A., Patel, C., & Tirtiroglu, E. (2001). Performance measures and metrics in a
supply chain environment. International Journal of Operations & Production Management,
21(1/2), 71-87. http://dx.doi.org/10.1108/01443570110358468
Inderfurth, K. (1991). Safety stock optimization in multi-stage inventory system. International
Journal of Production Economics, 24(1-2), 103-113. http://dx.doi.org/10.1016/0925-
5273(91)90157-O
Jung, J.Y., Blau, G., Pekny, J.F., Reklaitis, G.V., & Eversdyk, D. (2008). Integrated safety stock
management for multi-stage supply chains under production capacity constraints. Computers
and Chemical Engineering, 32, 2570-2581. http://dx.doi.org/10.1016/j.compchemeng.2008.04.003
Kainuma, Y., & Tawara, N. (2006). A multiple attribute utility theory approach to lean and
green supply chain management. International Journal of Production Economics, 101,
99-108. http://dx.doi.org/10.1016/j.ijpe.2005.05.010
Lamming, R. (1996). Squaring lean supply with supply chain management. International
Journal of Operations & Production Management, 16(2), 183-196.
http://dx.doi.org/10.1108/01443579610109910
Li, Q.Y., & Li, S.J. (2009, July). A dynamic model of the safety stock under VMI. Proceedings of
the Eighth International Conference on Machine Learning and Cybernetics, 1304-1308.
Long, Q., Liu, L.F., Meng, L.Q., & Chen, W. (2009). Logistics cost optimized election in the
manufacturing process based on ELECTURE-II Algorithm. In Proceedings of the IEEE
International Conference on Automation and Logistics.
Maloni, M.J., & Benton, W.C. (1997). Supply chain partnerships: Opportunities for operations
research. European Journal of Operational Research, 101(3), 419-429.
http://dx.doi.org/10.1016/S0377-2217(97)00118-5
Mason-Jones, R., Nalor, B., & Towill, D.R. (2000). Lean, agile or leagile? Matching your supply
chain to the marketplace. International Journal of Production Research, 38(17), 4061-4070.
http://dx.doi.org/10.1080/00207540050204920
McCullen, P., & Towill, D. (2001). Achieving lean supply through agile manufacturing.
Integrated Manufacturing Systems, 524-533. http://dx.doi.org/10.1108/EUM0000000006232
Natarajan, R., & Goyal, S. (1994). Safety stocks in JIT environments. International Journal of
Operations & Production Management, 14(10), 64-71.
http://dx.doi.org/10.1108/01443579410067261
Naylor, J.B., Naim, M.M., & Berry, D. (1999). Leagility: Integrating the lean and agile
manufacturing paradigms in the total supply chain. International Journal of Production
Economics, 62, 107-118. http://dx.doi.org/10.1016/S0925-5273(98)00223-0
Qi, F., Xuejun, X., & Zhiyong, G. (2007). Research on Lean, Agile and Leagile Supply Chain.
National Natural Foundation of China Grand and IOM European, 4902-4905.

Thank you for copying data from http://www.arastirmax.com