Title: The impact of forecasting error, stream level, and control mechanism of the supply chain enhanced by theory of constraints on the order fill rate and the inventory level

Authors: Hokey Min; Bih-Ru Lea

Addresses: Department of Management, Allen and Carol Schmidthorst College of Business, Bowling Green State University, Maurer Center 312, Bowling Green, Ohio 43403, USA ' Department of Business and Information Technology, Missouri University of Science and Technology, 102A Fulton Hall, Rolla, MO 65401, USA

Abstract: This research aims to validate the usefulness of the theory of constraints (TOC) principles for supply chain management. Such validation starts with the assessment of the impact of forecasting error, the stream level of supply chain partners, and the choice of supply chain control mechanism on the performance of a supply chain enhanced by TOC. Specifically, throughput dollar days (TDDs) and inventory dollar days (IDDs) were used as supply chain control measures. The results revealed that TOC-enhanced supply chain performance hinges on the extent of demand forecasting error and that the stream level (being in the upstream or downstream) of the supply chain partner tended to influence its inventory size and the subsequent inventory carrying cost, whereas the stream level had little to do with the supply chain partner's order fill rate. Furthermore, the dynamics of the supply chain control mechanism with regard to supply chain performance have been analysed.

Keywords: supply chain performance; theory of constraints; TOCs; throughput dollar days; TDDs; inventory dollar days; IDDs; supply chain disruption.

DOI: 10.1504/IJLSM.2025.144435

International Journal of Logistics Systems and Management, 2025 Vol.50 No.2, pp.179 - 208

Received: 03 May 2022
Accepted: 08 Jul 2022
Published online: 13 Feb 2025 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article