How many to produce? The impact of machine flexibility on the performance of a supply chain

Abstract

This work analyses the impact of machine flexibility on the performance level of a supply chain. A simulation model is developed to reproduce different supply chain configurations, with one player per echelon. Machine flexibility is modelled as the capability of the manufacturer to produce different kinds of products, in response to the customer's requests, and of the supply chain to manage those products. By means of simulation, six supply chain configurations are investigated, resulting from the combination of different numbers of supply chain players (from 3 to 5) and of products managed by the supply chain (1 or 3). For each scenario, we compute some economic outcomes (i.e., cost of holding stocks, stock-out cost, production or order cost and total supply chain cost), as well as the supply chain lead time and the bullwhip effect. Design of experiments and statistical analysis of outcomes are used to assess the significance of the effects measured. Results of the study provide some guidelines about the effect of machine flexibility on the supply chain performance.