Measuring the performance sensitivity of replenishment systems using tradeoff curves

There are a number of studies in the literature where replenishment systems have been compared on the basis of mean performance. However, little attention has focused on comparing systems on the basis of sensitivity to changes in the supply chain environment. This study compares the performance sensitivity of reorder point (ROP) and Kanban replenishment systems in a capacitated supply chain using an optimum-seeking simulation approach. Changes in the supply chain environment include transit time variability, transporter frequency, demand rates and lot setup times. Performance tradeoff curves, showing the interaction of inventory and delivery performance, are generated and an index based on the areas under the tradeoff curves is proposed to quantify the performance sensitivity. It is found that the Kanban system is generally less sensitive, in part because it operates optimally at a lower utilisation level. It is also observed that performance sensitivity depends on the environmental factor that is perturbed. [Received 29 August 2011; Revised 12 June 2012; Revised 16 April 2013; Accepted 4 June 2013]