Volume 57 : 3
Liber Amicorum Dedicated to Prof. Marc Lambre
Tribute to Marc Lambrecht
Public Private Partnerships: Look before you Leap into Marriage
Mix, Time and Volume Flexibility: Valuation and Corporate Diversification
Matrix-Analytic Methods in Supply Chain Management: Recent Developments
Managing Variability in Manufacturing and Services
Combining a Quantitative Approach of Planning and Control with a Lean Approach: Reflections on a Case Study
Sales and Operations Planning Revisited: Linking Operational and Financial Performance
The Value of Multi-Echelon Models
Bullwhip in a Multi-Product Production Setting
The Return of the Bullwhip
Liber Amicorum Dedicated to Prof. Marc Lambre
Tribute to Marc Lambrecht
Public Private Partnerships: Look before you Leap into Marriage
Mix, Time and Volume Flexibility: Valuation and Corporate Diversification
Matrix-Analytic Methods in Supply Chain Management: Recent Developments
Managing Variability in Manufacturing and Services
Combining a Quantitative Approach of Planning and Control with a Lean Approach: Reflections on a Case Study
Sales and Operations Planning Revisited: Linking Operational and Financial Performance
The Value of Multi-Echelon Models
Bullwhip in a Multi-Product Production Setting
The Return of the Bullwhip
Year
2012
Volume
57
Number
3
Page
339
Language
English
Court
Reference
P.L. JACKSON en J.A. MUCKSTADT, “The Value of Multi-Echelon Models”, RBE 2012, nr. 3, 339-353
Recapitulation
We present a rationale for implementing multi-echelon inventory methods by focusing on a business opportunity we call the “curse of variety.” The curse of variety phenomenon, which can be traced to fundamental economics in lot sizing and safety stock, occurs when inventory investment is disproportionately concentrated in items that are slow-moving. The curse is both a drag on efficiency and a vulnerability to market share loss to more focused suppliers. Also, when customer service targets are set at the individual product level, the result will be that each echelon within a distribution network will carry the same range of product to relatively similar levels of depth. We then change the customer service level targets in a way that honors their original intent but permits safety stock inventories to be concentrated in items and locations for greater effectiveness. The result of the change is to reduce the total safety stock investment required by making the distribution of safety stock between echelons complementary rather than duplicative. It also appears as if this change in strategy greatly mitigates the curse of variety, at least with regard to safety stock investment. The rationale is illustrated by means of a simple numerical example.
