On strategy when demand information is lagged in a supply chain


We consider the situation where the most up-to-date information of the market demand and the net stock levels is not available for a replenishment decision-maker in a manufacturer. The objective of the manufacturer is to minimize its total cost: the sum of the inventory and the production costs. An intuitively attractive strategy under this setting might be reducing the time lag as much as possible by introducing information technologies, (e.g., RFID) for example. We call this strategy the Time lag Elimination Strategy (TES). We propose an alternative strategy that can also reduce the total cost as much as TES can without introducing new information systems. This strategy is called the Controlling Dynamics Strategy (CDS). It is shown that both strategies can yield similar cost savings.

Manufacturing and Service Operations Management Annual Conference, MIT, Cambridge, USA, June 28th–30th, 6 pages