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Article
Publication date: 20 May 2011

Emmett J. Lodree

Planning inventories for emergency supplies such as bottled water, non‐perishable foods, batteries, and flashlights can be challenging for retailers situated within the…

Abstract

Purpose

Planning inventories for emergency supplies such as bottled water, non‐perishable foods, batteries, and flashlights can be challenging for retailers situated within the projected path of a severe storm. The retailer's inventory decisions are complicated by the inherent volatility of storm forecasts and the corresponding demand predictions. The purpose of this paper is to explore both proactive and reactive inventory control policies within the context of probable pre‐storm demand surge for a fast‐moving emergency supply item, and identify the conditions that are most conducive to each strategy according to the minimax decision criterion.

Design/methodology/approach

The inventory system is formulated based on an underlying economic order quantity framework. Minimax decision rules are developed analytically. Sensitivity analysis is facilitated by both analytic and numerical methods.

Findings

The conditions that are conducive to a proactive ordering strategy are limited supplier flexibility, acute demand surge, and exorbitant reorder costs; otherwise, the minimax inventory control policy is given by a reactive ordering strategy.

Research limitations/implications

The above‐mentioned findings are based on a stylized inventory model characterized by assumptions that are consistent with the academic literature. In order to assess the implications of these results in practice, the model should be extended according to the relevance of each assumption to specific real‐world inventory systems.

Social implications

Householders preparing for probable evacuation or post‐storm power outages typically overwhelm grocery and home improvement stores during a brief period prior to the impact of an approaching weather system. This phenomenon triggers a temporary spike in demand for several stock keeping units, which is oftentimes accompanied by pervasive inventory shortages that proliferate community vulnerability and engender a sense of disarray throughout the local populace. Effective inventory management of emergency supply items during this period can help alleviate some of these social dilemmas.

Originality/value

Few academic publications address inventory management from the perspective of humanitarian relief. Among existing studies, the emphasis has been coordination of emergency supplies for post‐disaster relief and recovery activities. This paper appears to be the first academic investigation of an inventory system driven by the pre‐storm demand surge for emergency supplies that typically occurs in the presence of an ominous and potentially devastating weather system. Additionally, this study conceivably represents the first minimax distribution free approach to inventory control within the context of humanitarian logistics and disruption management.

Details

Journal of Humanitarian Logistics and Supply Chain Management, vol. 1 no. 1
Type: Research Article
ISSN: 2042-6747

Keywords

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Article
Publication date: 1 April 2014

Barin Nag, Chaodong Han and Dong-qing Yao

In manufacturing industries, the levels of inventories at all stages (i.e. raw material, work-in-process and finished goods inventories) indicate the firm's competitive…

Abstract

Purpose

In manufacturing industries, the levels of inventories at all stages (i.e. raw material, work-in-process and finished goods inventories) indicate the firm's competitive positioning, strategies, internal processes and relationships with suppliers and downstream customers. The authors identify patterns of manufacturing industries based on levels of raw material and finished goods inventories to classify inbound and outbound supply chain strategies.

Design/methodology/approach

The authors review literature on supply chain inventory strategy and perform cluster analysis to analyze patterns of manufacturing industries based on manufacturing industry data collected from US Census of Bureau. Following Porter's Five Forces Model, the authors perform in-depth case studies of four representative industries to analyze factors driving supply chain strategies, including industry intensity of rivalry, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of buyers.

Findings

This study identifies three streams of research on supply chain strategy: Fisher's model and its variations, lean and agile paradigms, and push/pull systems. It finds that whether an industry shows low or high raw materials or finished goods inventories depending on its products, processes, and the dynamics of all forces described in the Five Forces Model.

Research limitations/implications

This study is not able to include supplier selection, production strategies, warehousing and distribution, and even product design into the analysis of supply chain strategy due to data limitation. This study classifies industries based on average inventory levels of raw materials and finished goods, while inventory levels and supply chain strategies for specific firms may vary significantly within each industry.

Originality/value

This study contributes to the supply chain management literature by providing a parsimonious framework of mapping inbound and outbound supply chain inventory strategies, and the results based on the analyses of all US manufacturing industries provide a baseline picture for supply chain management professionals with manufacturing firms.

Details

Journal of Manufacturing Technology Management, vol. 25 no. 3
Type: Research Article
ISSN: 1741-038X

Keywords

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Article
Publication date: 4 September 2009

Rommert Dekker, Eelco van Asperen, Geerten Ochtman and Walter Kusters

The purpose of this paper is to consider the use of temporary storage offered by intermodal transshipment points to position some stock of fast moving consumer goods in…

Abstract

Purpose

The purpose of this paper is to consider the use of temporary storage offered by intermodal transshipment points to position some stock of fast moving consumer goods in advance of demand; this floating stock concept combines transport and inventory management. Intermodal transport is compared with direct road transport for a supply chain.

Design/methodology/approach

First an analytical comparison is made which shows that the floating stock concept has advantages in inventories over pure road and intermodal transport. Next, a simulation study of a real case is made which quantifies the cost‐differences in detail.

Findings

It is found that both storage costs can be lowered and shorter response times be gotten by sending shipments in advance to intermodal terminals. The advance positioning can offset the disadvantage of a longer transit time in intermodal transport.

Research limitations/implications

Demand needs to be somewhat predictable. The pooling effects depend on geographical layout of the customers. The availability of intermodal transport options is based on the situation in Western Europe.

Practical implications

The floating stock concept considers both the transport and inventory issues. By positioning some of the stock at transshipment points close to the customer in anticipation of demand, the concept can yield lower inventory costs as well as a lower customer lead time. The benefit for logistics service providers is a more regular supply chain. Using intermodal transport provides an opportunity to green the supply chain as the environmental impact per ton/kilometer is lower than road transport.

Originality/value

This paper draws on the areas of logistics and inventory management to consider the choice of transport mode; most studies look at these issues in isolation. Considering the holding and storage costs in addition to the distribution strategy enables a more thorough comparison of the transport modes.

Details

International Journal of Physical Distribution & Logistics Management, vol. 39 no. 8
Type: Research Article
ISSN: 0960-0035

Keywords

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Article
Publication date: 1 September 1994

Bernard J. La Londe and James M. Masters

Looks, in depth, at corporate logistics strategy, particularly withregard to the USA. Discusses strategy referring to a general concept ofoperations guiding all activities…

Abstract

Looks, in depth, at corporate logistics strategy, particularly with regard to the USA. Discusses strategy referring to a general concept of operations guiding all activities towards an ultimate goal – global rather than local. Itemizes some major American firms and their attitudes and considers their policies and results. Shows supply chain management and cycle time compression to be complementing logistics strategies for progressive US firms.

Details

International Journal of Physical Distribution & Logistics Management, vol. 24 no. 7
Type: Research Article
ISSN: 0960-0035

Keywords

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Article
Publication date: 1 November 2000

S.M. Hong‐Minh, S.M. Disney and M.M. Naim

Considers the dynamical effect of lateral emergency transhipments within a supply chain. It tests various different strategies for improving customer service via the MIT…

Abstract

Considers the dynamical effect of lateral emergency transhipments within a supply chain. It tests various different strategies for improving customer service via the MIT Beer Game. Four distinct strategies are considered. “Electronic point of sales (EPOS)”, where marketplace information is forwarded to all players throughout the supply chain; “Excel”, where the stock levels in all echelons are controlled by the factory; “Emergency transhipments”, where an express transportation route bypassing an echelon in the supply chain is permitted; “Eliminate”, where an echelon is removed from the supply chain. The Beer Game strategies are also studied via a simulation exercise. Results show that the Excel strategy is flawed, whereas the EPOS strategy has a strong impact on inventory cost, Emergency transhipments has a strong impact on customer service level and Eliminate results in less stock for an improved customer service level. Combinations of the three viable strategies are also tested. This paper concludes that the three strategies can be integrated to significantly improve supply chain performance.

Details

International Journal of Physical Distribution & Logistics Management, vol. 30 no. 9
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 29 July 2014

Juan D. Mendoza, Josefa Mula and Francisco Campuzano-Bolarin

The purpose of this paper is to explore different aggregate production planning (APP) strategies (inventory levelling, validation of the workforce and flexible production…

Abstract

Purpose

The purpose of this paper is to explore different aggregate production planning (APP) strategies (inventory levelling, validation of the workforce and flexible production alternatives: overtime and/or outsourcing) by using a system dynamics model in a two-level, multi-product, multi-period manpower intensive supply chain (SC). Therefore, the appropriateness of using systems dynamics as a research method, by focusing on managerial applications, to analyse APP policies is proven. From the combination of systems dynamics and APP, recommendations and action strategies are considered for each scenario to understand how the system performs and to improve decision making on APP in the SC context.

Design/methodology/approach

The research design analyses a typical factory setting with representative parameter settings for five different conventional APP policies – inventory levelling, workforce variation, overtime, outsourcing and a combination of overtime and outsourcing – through deterministic systems dynamics-based simulation. In order to validate the simulation model, the results from published APP models were replicated. Then, optimisation is conducted for this deterministic setting to determine the performance of all these typical policies with optimal parameter settings. Next, a Monte Carlo stochastic simulation is used to assess the robustness of such performances in a variety of demand settings. Different aggregate plans are tested and the effect that events like demand variability and production times have on the SC performance results is analysed.

Findings

The results support the assertion that the greater the demand variability, the higher the flexibility costs (overtime, outsourcing, inventory levelling, and contracts and firings). As greater inter-month oscillations appear, which must be covered with additional alternatives, the optimum number of employees must be determined by analysing the interchanges and marginal costs between capacity oversizing costs (wages, idle time, storage) and the costs to undersize it (penalties for lowering safety stocks, delayed demand, greater use of overtime and outsourcing). Accordingly, controlling the times to avoid increased costs and penalties incurred by delayed demand becomes an essential important task, but one that also depends on the characteristics of this variability.

Practical implications

This paper has developed a modelling approach for APP in a manpower intensive SC by applying system dynamics. It includes a simulation model, the analysis of several scenarios, the impact on performance caused by variability events in the parameters, and some recommendations and action strategies to be subsequently applied. The modelling methodology proposed can be employed to design-specific models for each SC.

Originality/value

This paper proposes an APP system dynamics approach in a two-level, multi-product, multi-period manpower intensive SC for the first time. This model bridges the gap in the literature relating to simulation, specifically system dynamics and its application for APP. The paper also provides a qualitative description of the various pros and cons of each analysed policy and how they can be combined.

Details

International Journal of Operations & Production Management, vol. 34 no. 8
Type: Research Article
ISSN: 0144-3577

Keywords

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Article
Publication date: 1 October 1994

Timothy D. Fry, Daniel C. Steele and Brooke A. Saladin

Introduces the concept of a manufacturing strategy based on a serviceorientation. Traditional manufacturing strategies have often beendriven by cost minimization decisions…

Abstract

Introduces the concept of a manufacturing strategy based on a service orientation. Traditional manufacturing strategies have often been driven by cost minimization decisions and have encouraged the over‐reliance by managers on inventories to satisfy demand. In today′s business environment, a reliance on inventory is often not feasible. Suggests a reliance on capacity available to meet demand, as used by the service industry. Such a strategy is in direct conflict with most cost‐accounting systems because of the absorption of overhead costs based on direct labour. Proposes two alternatives for changing the accounting system, to enhance the move towards the service‐based strategy. Lastly, presents a case study of a US plant to illustrate the results that a company adopting this approach should expect.

Details

International Journal of Operations & Production Management, vol. 14 no. 10
Type: Research Article
ISSN: 0144-3577

Keywords

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Article
Publication date: 14 December 2018

Yong Ye and Yuanqin Ge

The research mainly aims at the hotspot of inventory management by knowledge mapping and provides a visualization reference in this research field.

Abstract

Purpose

The research mainly aims at the hotspot of inventory management by knowledge mapping and provides a visualization reference in this research field.

Design/methodology/approach

First, inventory management journals during 1986 to 2017 were selected as the research object and text formatting in the Web of Science (WOS) database is exported. Then inventory management knowledge mapping is done and clustering keywords are extracted by using CiteSpace and VOSviewer software. Based on co-word analysis, the three special clusters are exported: inventory optimization strategy, inventory pricing and inventory technology. Besides, the clustering structure and time evolution are analysed. Finally, bibliographic item co-occurrence matrix builder (BICOMB) was used to extract the “journal” and “researchers” keywords in the inventory management research fields. Setting three parameters such as the cited half-life, centrality, frequency and keywords for data mining, it can infer the trend keywords of future research.

Findings

Results showed that inventory management research has been abundant in literature over the past 30 years and has experienced a change from focusing on inventory optimization strategy to inventory pricing and inventory technology in process. It shows that inventory management research focused on the classic topics and includes economic order quantity, dynamic pricing, design and technology, and the new topics include channel coordination, hierarchical price and simulation.

Research limitations/implications

Based on knowledge mapping, this study is still relatively macro and cannot cover all areas of inventory management. This study only investigated the state of correlational research in WOS and Google Trends and not additional databases.

Originality/value

The current research mainly builds on knowledge mapping for the research hotspot of inventory management and provides visual references for future research in this field.

Details

The Electronic Library, vol. 37 no. 1
Type: Research Article
ISSN: 0264-0473

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Article
Publication date: 1 August 1981

Ronald H. Ballou

The design of logistical systems historically has been responsive to the economic climate and market requirements of the times. When the cost of money rose dramatically…

Abstract

The design of logistical systems historically has been responsive to the economic climate and market requirements of the times. When the cost of money rose dramatically during the 1960s, companies reacted by reducing the number of stocking points in their distribution systems. This was a proper response considering that capital costs represent a high proportion of inventory carrying costs. On the other hand, warehouse storage and handling, transportation, and production costs had much smaller relative increases. Consider just how dramatic the warehousing change was for two companies.

Details

International Journal of Physical Distribution & Materials Management, vol. 11 no. 8
Type: Research Article
ISSN: 0269-8218

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Article
Publication date: 26 October 2010

Yohanes Kristianto, Petri Helo and Josu Takala

This paper focuses on decision making related to the use of strategic inventory allocation in product platform design. The purpose of the paper is to present a novel…

Abstract

Purpose

This paper focuses on decision making related to the use of strategic inventory allocation in product platform design. The purpose of the paper is to present a novel approach to managing product variety by considering product and manufacturing strategy, and considering the supply chain benefits.

Design/methodology/approach

Discrete event simulation is used for analyzing product platform performance in terms of inventory level and throughput. Simulation parameters such as lead times and safety stock allocation are optimized by using an analytical model of strategic safety stock allocation.

Findings

The results show that strategic safety stock allocation supports product platform strategy by increasing production output, and reducing inventory level and customer order queues at a higher level of product variety.

Research limitations/implications

Linking the safety stock allocation and product platform strategy facilitates simultaneous product and process design by providing the most optimum platform strategy at minimum safety stock allocation.

Practical implications

Strategic safety stock allocation facilitates decision making with regard to lean strategy by reducing inventory level, agile strategy by increasing the amount of product variety and outputs, and responsiveness by reducing the number of customer order queues.

Originality/value

The paper presents an innovative customer order decoupling point decision.

Details

Journal of Advances in Management Research, vol. 7 no. 2
Type: Research Article
ISSN: 0972-7981

Keywords

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