Network Planning - Inventory positioning and logistics coordination - Strategic safety stock
5 important questions on Network Planning - Inventory positioning and logistics coordination - Strategic safety stock
What is a make-to-order facility?
Which question arises when managing inventory in a complex supply chain?
How do we calculate the safety stock a facility should keep?
With:
SI = the amount of time that passes from when an order is placed until the facility receives a shipment; this time is referred to as the incoming service time
S = the committed service time made by the facility to its own customers
T = the processing time at the facility
z = safety stock factor associated with a specified level of service
h = the inventory holding cost
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How is it possible to achieve reducing inventory cost while maintaining and sometimes significantly decreasing quoted service times to the customers?
- Identifying the push-pull boundary
- Taking advantage of the risk pooling concept
- Replacing traditional supply chain strategies that are typically referred to as sequential or local optimization by a globally optimized supply chain strategy
What does a shift of the trade-off curve, due to optimally locating the push-pull boundary, imply?
- For the same quoted lead time, the company can significantly reduce costs
- For the same cost, the firm can significantly reduce lead time
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