A_Schematic_of_a_Supply_Chain

A_Schematic_of_a_Supply_Chain - A SCHEMATIC OF A SUPPLY...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
A SCHEMATIC OF A SUPPLY CHAIN Outside Supplier Component Producer(s) Final Assembly Warehouse Warehouse Customers Landfills
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A MULTI-ECHELON INVENTORY SYSTEM Outside supplier(s) Central Warehouse Branch Warehouse Branch Warehouse Retail outlets Customers
Background image of page 2
BEHAVIOR OF THE INVENTORY LEVELS IN A DETERMINISTIC TWO-STAGE PROCESS 0 Time Warehouse Inventory Level Q w Q r 0 Time Retail Inventory Level
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A MULTIECHELON SYSTEM INFORMATION FLOW IN SINGLE-STAGE AND BASE-STOCK SYSTEMS SYSTEM Central Warehouse Supplier Replenishments Information (orders) Branch Warehouse Retailer Customers Information (orders) Information (orders) Replenishments Replenishments 1 week 1 week 3 weeks Only used in Base Stock models
Background image of page 4
AN ILLUSTRATION OF A BULLWHIP EFFECT 0 100 200 300 400 500 600 700 1 2 3 4 5 6 7 8 9 10 11 12 0 100 200 300 400 500 600 700 800 1 2 3 4 5 6 7 8 9 10 11 12 0 100 200 300 400 500 600 700 1 2 3 4 5 6 7 8 9 10 11 12 Central Warehouse order size Units Distribution Center Order Size Units Grocery Store Order Size Units
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM) is the term used to describe the management of materials and information across the entire supply chain, from supplier to component producers to final assemblers to distribution (warehouses and retailers), and ultimately to the consumer. It often includes the after-sales service and returns or recycling. More and more firms are seeing themselves as a supply chain competing against other supply chains. Furthermore, as firms successfully streamline their operations, the next opportunity for improvement is through better coordination with their suppliers and customers. Many products that have steady demand throughout the year may show highly variable periodic patterns due to trade promotions, volume discounts, long lead times, full truckload discounts, and end of quarter sales incentives. In fact, the variability increases in moving up the supply chain from consumer to retail outlets to distribution center to central warehouse to factory, a phenomenon often called the bullwhip effect . The costs of this variability are high – inefficient use of production and warehouse resources, high transportation costs, and high inventory costs, to name a few. The following figure demonstrates the bullwhip effect. One major reason for the bullwhip effect is that retailers and distributors often overreact to shortages by ordering more than they need.
Background image of page 6
Four rational factors create the bullwhip effect: 1. Demand signal processing : if demand increases, firms order more in anticipation of further increases, thereby by ordering more than they need. 2. The Rationing Game : there is, or might be, a shortage so a firm orders more than the actual forecast in the hope of receiving a larger share of the items in short supply. 3.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

A_Schematic_of_a_Supply_Chain - A SCHEMATIC OF A SUPPLY...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online