An inventory position-based policy for better supply chain performance

Abstract

This paper proposes an inventory position-based policy, and its performance is assessed in terms of supply chain fill rate, bullwhip effect and total cost of supply chain under different scenarios. The scenarios are developed considering the different levels of supply chain structures, demand patterns, and information sharing strategies. Under each scenario, the performance of the proposed policy is compared with the other inventory position-based policies such as Order-Up-To, Order-Up-To smoothing, (s, S) and (s, Q) using spreadsheet-based simulation methodology. The multi-attribute performance comparison, grey relational analysis, shows that the proposed policy is the best compared to other policies tested because of the better performance in supply chain fill rate and order smoothing. The simulation study provides sufficient insights to managers in selecting a suitable inventory policy based on the operating conditions of a supply chain and multiple performance measures.