Improving delivery performance for gamma distributed delivery time

Abstract

This paper investigates strategies for improving delivery performance to the end customer in a two-stage supply chain. A cost-based analytical model is used to evaluate how the expected penalty cost resulting from early and late delivery can be reduced. The effects of the width of the delivery window and the shape and scale parameters of the gamma distributed delivery time distribution on the expected penalty cost are explored. The model can guide practitioners who are attempting to cost-justify a program to improve delivery performance. It can also be used to estimate cost reduction over several deliveries and compare cost savings with required investments into delivery performance improvement. The model overcomes the limitations of previous delivery improvement studies which did not used an optimally positioned delivery window and were limited to symmetric delivery time distributions.