Multi-echelon inventory modeling and supply redesign

Many businesses struggle to optimize the flow of inventory and finished goods through existing plants and facilities. The integration of inventory costs, organizational processes, and changing business dynamics make it difficult to determine the optimal flow. This thesis examines the flow of raw materials and finished goods through the supply chain of a multi-national oilfield services company. We study a centralized inventory approach, assessed through heuristics, against the existing decentralized approach. Sensitivity analysis with regard to service level, and mode of transport strengthened the analysis. We show that demand aggregation and lead time are important factors in determining the upper echelon for a company's internal distribution model. Potential safety stock reduction is 2%, which is mainly due to the improved coordination for materials flowing to the final echelon in the supply chain. However, pipeline inventory increases by 12% as a result of longer lead times.

Department dc:contributor.department

Massachusetts Institute of Technology. Supply Chain Management Program.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2017

Authors dc:creator

• Scott, Patrick (Patrick James)
• Xu, Boxi

Advisor dc:contributor.advisor

• Josué C. Velázquez-Martínez

• Supply Chain Management Program.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written 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/1721.1/112856

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/112856