The impact of assured supply inventory policies

A case study is presented of a successful quick serve fast food restaurant chain that uses inventory throughout the supply chain as a buffer against uncertainty in supply and demand. This is a common operational strategy in many industries, but it limits options for the supply chain to become more agile, adaptable, and aligned to the dynamic needs of the enterprise. Trade-offs between transportation and holding costs are illustrated. The drawbacks of assuring supply by maintaining inventory at the distribution center level are discussed. Supply chain alternatives are presented including lateral transfers, forward warehouses, alternative modes of transportation, and multiple suppliers. An analytical approach is presented which provides a total relevant supply chain cost at the distribution center level. The approach is illustrated in the decision between two alternative transportation modes with different average lead times, lead time variabilities, and transportation costs.

Department dc:contributor.department

Massachusetts Institute of Technology. Engineering Systems Division.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Stanton, Daniel Jonathon

Advisor dc:contributor.advisor

• Chris Caplice.

• Engineering Systems Division.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/45244

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/45244