Estimating the effects of carrier transit-time performance on logistics cost and service
AbstractJoint determination of an appropriate transportation mode and an optimal inventory control policy is important in supply chain management. We present a method of estimating the effects of carrier transit-time performance on logistics cost and service. Unlike current approaches, this method enables users to develop accurate estimates when non-normal shapes characterize the probability distributions of both demand and lead time. Additionally, the methodology includes two important refinements to the standard transportation-inventory model. First, we relaxed the assumption that the shipping cost is a linear function of the order quantity. Second, we treated transit time as a segment of lead time. We used the gamma distribution to illustrate the flexibility of the method and developed an enhanced sensitivity-analysis tool for examining the effects of carrier transit time on both cost and service. The methodology is appropriate for the transportation of service-sensitive, independent-demand inventory items controlled by a continuous review inventory system.
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Bibliographic InfoArticle provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.
Volume (Year): 32 (1998)
Issue (Month): 2 (February)
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Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description
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