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LT variance or LT mean reduction in supply chain management: Which one has a higher impact on SC performance?

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  • Chaharsooghi, S. Kamal
  • Heydari, Jafar

Abstract

Lead time (LT) is an inseparable factor of any supply chain (SC). Lead time uncertainty is known as a type of supply uncertainty that affects ordering policies, inventory levels, and product availability level. There are two main strategies concerning SC uncertainties: adapter and shaper strategies that can be used in environments with LT uncertainty. As for LT mean, it can be reduced by improving the performance of upstream members. In this paper, relative importance of these two parameters to be reduced by these strategies is determined by investigating the effects of both LT mean and LT variance on supply chain performance indices. Simulation and multivariate models have shown that LT variance has a stronger impact on SC performance measures (including Bullwhip effect, holding inventory, stock-out size and number of stock-outs). This study can help managers in (1) rebalancing of these two parameters by applying a proper investment strategy; (2) suitable selection of service providers in transportation based on LT parameters.

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  • Chaharsooghi, S. Kamal & Heydari, Jafar, 2010. "LT variance or LT mean reduction in supply chain management: Which one has a higher impact on SC performance?," International Journal of Production Economics, Elsevier, vol. 124(2), pages 475-481, April.
    • Handle: RePEc:eee:proeco:v:124:y:2010:i:2:p:475-481
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