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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- Vernimmen, Bert & Dullaert, Wout & Willemé, Peter & Witlox, Frank, 2008. "Using the inventory-theoretic framework to determine cost-minimizing supply strategies in a stochastic setting," International Journal of Production Economics, Elsevier, vol. 115(1), pages 248-259, September.
- Engblom, Janne & Solakivi, Tomi & Töyli, Juuso & Ojala, Lauri, 2012. "Multiple-method analysis of logistics costs," International Journal of Production Economics, Elsevier, vol. 137(1), pages 29-35.
- Ruth Banomyong, 2010. "Supply Chain Dynamics in Asia," Working Papers id:3028, eSocialSciences.
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