TY - JOUR
T1 - Safety stock placement problem in capacitated supply chains
AU - Sitompul, Carles
AU - Aghezzaf, El Houssaine
AU - Dullaert, Wout
AU - Van Landeghem, Hendrik
PY - 2008/9/1
Y1 - 2008/9/1
N2 - Today's highly competitive business environment forces supply chain managers to maintain high service levels while keeping inventory-related costs as low as possible. Therefore, placing the right amount of safety stock at the right places in the supply chain is an important aspect of effective inventory management. This safety stock placement problem, for which some solution strategies have been proposed in the case of uncapacitated supply chains, becomes much more complicated when, in addition to the variability of the demand, capacity constraints also come into play. In this paper we propose a model to locate safety stocks in a capacitated supply chain with the objective of maintaining the required service level. The underlying relationships linking excess capacity, demand variability, and service levels are analysed to gain deeper understanding of the safety stock placement problem in capacitated supply chains. Based on these relationships a solution approach for the problem is proposed and is tested with Monte Carlo simulation.
AB - Today's highly competitive business environment forces supply chain managers to maintain high service levels while keeping inventory-related costs as low as possible. Therefore, placing the right amount of safety stock at the right places in the supply chain is an important aspect of effective inventory management. This safety stock placement problem, for which some solution strategies have been proposed in the case of uncapacitated supply chains, becomes much more complicated when, in addition to the variability of the demand, capacity constraints also come into play. In this paper we propose a model to locate safety stocks in a capacitated supply chain with the objective of maintaining the required service level. The underlying relationships linking excess capacity, demand variability, and service levels are analysed to gain deeper understanding of the safety stock placement problem in capacitated supply chains. Based on these relationships a solution approach for the problem is proposed and is tested with Monte Carlo simulation.
KW - Capacity constraint
KW - Periodic review
KW - Safety stock
KW - Supply chain
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U2 - 10.1080/00207540701278406
DO - 10.1080/00207540701278406
M3 - Article
AN - SCOPUS:48249103949
VL - 46
SP - 4709
EP - 4727
JO - International Journal of Production Research
JF - International Journal of Production Research
SN - 0020-7543
IS - 17
ER -