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Effect of component interdependency on inventory allocation

  • Yohanes Kristianto Nugroho
  • AHM Shamsuzzoha
  • Petri T. Helo
Conference paper

Abstract

The objective of this research approach is to improve the responsiveness and agility of the supply chain network by considering the allocation of inventory control, especially for the allocation of safety stock. This is achieved through considering the effect of components interdependencies and offering guaranteed lead times. An analytical model is presented in this paper, which is supported by discrete event simulation model in order to investigate the effect of material interdependency on the reduction to safety stock allocation. A case example from lead acid battery manufacturing supply chain network is used to demonstrate the applicability of the models. The results, by applying design structure matrix (DSM), showed that less material interdependency reduces the safety stock allocation significantly. The material interdependencies are reduced through clustering operation. The results also showed that reduction of material interdependency reduces the unnecessary investment in inventory management. The difference between the presented analytical model and the discrete event simulation is not significant, which also validate the proposed modeling approach.

Keywords

inventory allocation component interdependency design structure matrix (DSM) supply chain management safety stock 

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Copyright information

© Springer-Verlag London Limited 2011

Authors and Affiliations

  • Yohanes Kristianto Nugroho
    • 1
  • AHM Shamsuzzoha
    • 1
  • Petri T. Helo
    • 1
  1. 1.Department of ProductionUniversity of VaasaVaasaFinland

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