Consolidating Product Sizes to Minimize Inventory Levels for a Multi-Stage Production and Distribution System |
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Authors: | Dennis D Newhart Jr" target="_blank">Kenneth L StottJr Francis J Vasko |
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Institution: | 1.Bethlehem Steel Corporation,USA;2.Kutztown University,USA |
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Abstract: | The optimal design of a supply chain was approached in two phases by using: (1) a mathematical programming formulation and heuristic solution approach to minimize the distinct number of product types held at various points in the supply chain; and (2) a spreadsheet inventory model to estimate the safety stock needed to absorb random fluctuations in both demand and lead time throughout the system. This two-phased approach allowed management to quantify the effects of inventory required for locating parts of the supply chain in different geographic areas. The quantification of projected inventory requirements was a critical input used by senior management to clarify their final decision-making process. |
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