Supply chain design to guarantee quoted lead time and inventory replenishment: model and insights

Do lead time constraints only lead to re-think and re-optimise the inventory positioning along the supply chain or can they impact on the design of the supply chain itself? To answer such a question, we integrate the lead time constraints in a multi-echelon supply chain design model and challenge th...

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Bibliographic Details
Published in:International journal of production research 2017-06, Vol.55 (12), p.3431-3450
Main Authors: Hammami, Ramzi, Frein, Yannick, Bahli, Bouchaib
Format: Article
Language:English
Subjects:
Costs
Decisions
Engineering Sciences
Integer programming
Inventories
Inventory management
inventory placement
Lead time
mixed-integer programming
quoted lead time
Raw materials
Replenishment
Stockpiling
supply chain design
Supply chains
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Summary:Do lead time constraints only lead to re-think and re-optimise the inventory positioning along the supply chain or can they impact on the design of the supply chain itself? To answer such a question, we integrate the lead time constraints in a multi-echelon supply chain design model and challenge the difficulty of combining in the same model the long-term decisions (facility location, supplier selection) with the midterm decisions (inventory placement and replenishment, delivery lead time). The model guarantees the respect of the quoted lead time associated with each customer order and the replenishment of the different stocks (raw materials, intermediate and final products) in the different stages of the supply chain between any pair of consecutive orders. We use the model to investigate the impact of the quoted lead time and customer's order frequency on supply chain design decisions and costs. Some of our results indicate that the lead time constraints can lead to bringing the sites of manufacturing and distribution close to the demand zone and to select local suppliers in spite of their higher cost.
ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2016.1242799