Research on values of safety factor coordination under random supply
by Liu Jian, ShiHua Ma
International Journal of Services Technology and Management (IJSTM), Vol. 5, No. 1, 2004

Abstract: This research evaluates how supply uncertainty and safety factors affect a supply channel. Under deterministic demand, lead time variability at the retailer increases in the lead time variability at the warehouse and decrease in the warehouse's safety factor. Moreover, the greater the safety factor is, the smaller effect of supply uncertainty at warehouse on supply uncertainty at the retailer is. Meanwhile, this paper makes an optimisation of the safety factor and finds the optimal numerical solution. It is shown that optimisation and coordination of safety factors lead to inventory cost savings at two sites, especially under great supply uncertainty.

Online publication date: Mon, 10-May-2004

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