Journal
INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH
Volume 44, Issue 6, Pages 1037-1054Publisher
TAYLOR & FRANCIS LTD
DOI: 10.1080/00207540500338203
Keywords
inventory; production; supply chain dynamics; linear programming
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The use of Advanced Planning Systems (APS) has become widespread in many industries. This paper presents an analysis of how safety stock policies, as modelled in many APSs, can induce variation in production and distribution order quantities along the supply chain. The effect is illustrated using a system dynamics model of the supply chain of a Mexican branch of a multinational food and beverage company. Real demand data is used in the simulation. An explanation is provided for these production order distortions and modifications to the operating policies and the APS linear programming model are proposed to reduce these effects. Computational results and illustrative examples are presented.
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