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Effect of cost increment distribution patterns on the performance of jit supply chain

22 Jul 2008-Vol. 10, Iss: 1, pp 65-73

AbstractCost is an important consideration in supply chain (SC) optimisation. This is due to emphasis placed on cost reduction in order to optimise profit. Some researchers use cost as one of their performance measures and others propose ways of accurately calculating cost. As product moves across SC, the product cost also increases. This paper studied the effect of cost increment distribution patterns on the performance of a JIT Supply Chain. In particular, it is necessary to know if inventory allocation across SC needs to be modified to accommodate different cost increment distribution patterns. It was found that funnel is still the best card distribution pattern for JIT-SC regardless the cost increment distribution patterns used.

Topics: Semi-variable cost (64%), Total absorption costing (62%), Cost driver (61%), Total cost (61%), Cost reduction (60%)

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Book
01 Jan 2007
Abstract: Part I: Introduction To Supply Chain Management 1. Supply Chain Management, Integrated Planning, Models 2. Information Technology Part II: Modeling And Solution Methods 3. Fundamentals Of Modeling: Linear Programming 4. Fundamentals Of Modeling: Mixed Integer Programming 5. Unified Optimization Methodology For Operational Planning Problems 6. The Supply Chain Decision Database Part III: Applications 7. Strategic And Tactical Supply Chain Planning: State-Of-The-Art Modeling Applications 8. Strategic And Tactical Supply Chain Planning: Advanced Modeling Applications 9. Integration Of Financial And Physical Supply Chains 10. Operational Supply Chain Planning 11. Inventory Management Part Iv: Adaptation 12. Organizational Adaptation To Supply Chain Modelling Systems.

652 citations


"Effect of cost increment distributi..." refers background in this paper

  • ...The usual way to optimise profit is by minimising total cost (Shapiro, 2001)....

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Journal ArticleDOI
TL;DR: An integrated multi-objective supply chain model is developed for use in simultaneous strategic and operational SC planning and will aid in the design of efficient, effective, and flexible supply chain systems and evaluation of competing SC networks.
Abstract: In this research, an integrated multi-objective supply chain (SC) model is developed for use in simultaneous strategic and operational SC planning. Multi-objective decision analysis is adopted to allow use of a performance measurement system that includes cost, customer service levels (fill rates), and flexibility (volume or delivery). This measurement system provides more comprehensive measurement of supply chain system performance than do traditional, single-measure approaches. Moreover, this model incorporates production, delivery, and demand uncertainty, and provides a multi-objective performance vector for the entire SC network. The model developed here will aid in the: (1) design of efficient, effective, and flexible supply chain systems and (2) evaluation of competing SC networks.

556 citations


"Effect of cost increment distributi..." refers background in this paper

  • ...Considering this, various researches in supply chain operation research integrate cost as one of their performance measures such as Gullu (1997), Sabri and Beamon (2000), Petrovic et al. (1998), Omar and Shaharoun (2000), Larson et al. (1999) and Van Der Vost et al. (2000), while Lin et al. (2001)…...

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Journal ArticleDOI
TL;DR: Two approaches to managing this operation are compared, one in which the production scheduling and vehicle routing problems are solved separately, and another in which they are coordinated within a single model.
Abstract: This paper is a computational study to investigate the value of coordinating production and distribution planning. The particular scenario we consider concerns a plant that produces a number of products over time and maintains an inventory of finished goods at the plant. The products are distributed by a fleet of trucks to a number of retail outlets at which the demand for each product is known for every period of a planning horizon. We compare two approaches to managing this operation, one in which the production scheduling and vehicle routing problems are solved separately, and another in which they are coordinated within a single model. The two approaches are applied to 132 distinct test cases with different values of the basic model parameters, which include the length of the planning horizon, the number of products and retail outlets, and the cost of setups, inventory holding and vehicle travel. The reduction in total operating cost from coordination ranged from 3% to 20%. These results indicate the conditions under which companies should consider the organizational changes necessary to support coordination of production and distribution.

514 citations


"Effect of cost increment distributi..." refers background in this paper

  • ...…chain operation research integrate cost as one of their performance measures such as Gullu (1997), Sabri and Beamon (2000), Petrovic et al. (1998), Omar and Shaharoun (2000), Larson et al. (1999) and Van Der Vost et al. (2000), while Lin et al. (2001) propose ways of accurately calculating cost…...

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Journal ArticleDOI
01 Sep 1998
TL;DR: F fuzzy modelling and simulation of a supply chain (SC) in an uncertain environment, as the first step in developing a decision support system, was described.
Abstract: This paper describes fuzzy modelling and simulation of a supply chain (SC) in an uncertain environment, as the first step in developing a decision support system. An SC is viewed as a series of facilities that performs the procurement of raw material, its transformation to intermediate and end-products, and distribution and selling of the end-products to customers. All the facilities in the SC are coupled and interrelated in a way that decisions made at one facility affect the performance of others. SC fuzzy models and a simulator cover operational SC control. The objective is to determine the stock levels and order quantities for each inventory in an SC during a finite time horizon to obtain an acceptable delivery performance at a reasonable total cost for the whole SC. Two sources of uncertainty inherent in the external environment in which the SC operates were identified and modelled: customer demand and external supply of raw material. They were interpreted and represented by fuzzy sets. In addition to the fuzzy SC models, a special SC simulator was developed. The SC simulator provides a dynamic view of the SC and assesses the impact of decisions recommended by the SC fuzzy models on SC performance.

265 citations


"Effect of cost increment distributi..." refers background in this paper

  • ...…researches in supply chain operation research integrate cost as one of their performance measures such as Gullu (1997), Sabri and Beamon (2000), Petrovic et al. (1998), Omar and Shaharoun (2000), Larson et al. (1999) and Van Der Vost et al. (2000), while Lin et al. (2001) propose ways of…...

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Journal ArticleDOI
TL;DR: This paper presents a method for modelling the dynamic behaviour of food supply chains and evaluating alternative designs of the supply chain by applying discrete-event simulation and identifies major benefits for this supply chain.
Abstract: This paper presents a method for modelling the dynamic behaviour of food supply chains and evaluating alternative designs of the supply chain by applying discrete-event simulation. The modelling method is based on the concepts of business processes, design variables at strategic and operational levels, performance indicators, and business entities, as these concepts allow relevant aspects of a food supply chain to be described and modelled. Our simulation model is based on timed coloured Petri-nets to support decision-making when redesigning a supply chain for chilled food products. Scenario analysis allowed us to evaluate the potential benefits of alternative designs for this supply chain in terms of logistical performance. In this case study, major benefits were identified. The results of the scenario analysis are compared with the outcomes of a pilot project where one scenario was implemented in real life.

218 citations


"Effect of cost increment distributi..." refers background in this paper

  • ...Considering this, various researches in supply chain operation research integrate cost as one of their performance measures such as Gullu (1997), Sabri and Beamon (2000), Petrovic et al. (1998), Omar and Shaharoun (2000), Larson et al. (1999) and Van Der Vost et al. (2000), while Lin et al. (2001) propose ways of accurately calculating cost by implementing activity-based costing (ABC) in managing logistics....

    [...]

  • ...…measures such as Gullu (1997), Sabri and Beamon (2000), Petrovic et al. (1998), Omar and Shaharoun (2000), Larson et al. (1999) and Van Der Vost et al. (2000), while Lin et al. (2001) propose ways of accurately calculating cost by implementing activity-based costing (ABC) in managing…...

    [...]