Order Progress Information: Improved Dynamic Emergency Ordering Policies

Abstract

T echnologies such as radio-frequency identification and global positioning systems can provide improved real-time tracking information for products and replenishment orders along the supply chain. We call this type of visibility order progress information. In this paper, we investigate how order progress information can be used to improve inventory replenishment decisions. To this end, we examine a retailer facing a stochastic lead time for order fulfillment. We characterize a replenishment policy that is based on the classical Q R policy and that allows for releasing emergency orders in response to the order progress information. We show that the optimal structure of this policy is given by a sequence of threshold values dependent on order progress information. In a numerical study we evaluate the cost savings due to this improved replenishment policy.

Effect of Supply Reliability in a Retail Setting with Joint Marketing and Inventory Decisions

“…Kok and Shang (2006) analyze an inventory system with accumulating inaccuracy in inventory records and study the value of RFID in improving inventory tracking in such an inventory system. Heese (2007) Gaukler et al (2008) quantify the value of obtaining the supplier's order progress information using RFID for a retailer with random lead time and stochastic demand. Gaukler et al (2007) study the value of RFID in a supply chain setting and address the incentive compatibility issue in which the supply chain members have conflicting interests in adopting RFID.…”

Mitigating supply and production uncertainties with dynamic scheduling using real-time transport information

“…Simulation experiments show that the 'Dynamic algorithm' outperforms commonly used scheduling policies. Such GPS-and RFID-based real-time tracking technologies were useful in supply chains for generating express orders (Gaukler et al, 2008) and for sharing collaborative information (Sari, 2010). This paper shows that final assemblers can use GPS-enabled real-time transport information for production re-scheduling to save important costs.…”

“…The contributions of Gaukler et al (2008) and Sari (2010) are among the studies in this area using the same methodology employed in this work, simulation. These papers aim at assessing the benefits of RFID tracking in supply chains, with Gaukler et al (2008) focusing on the process of expediting late orders and Sari (2010) conducting his study in a multi-echelon setting. Both studies show that the benefits ensuing from tracking technologies are often intangible, for supply chain visibility, and, therefore, difficult to evaluate.…”

“…Although disruptions and delays in production could be timely identified, it was not so for transport operations until recently, thanks to technology developments such as GPS-based vehicle tracking (Gaukler et al, 2008). Allowing realtime gathering of shipment status, these technologies have attracted some attention from practitioners as they could be used to dynamically reschedule production if supply-side transport disruptions occur (GIS Park, 2011).…”

Spare Parts Planning and Control for Maintenance Operations

“…Modeling lead time as such is a convenient device to investigate the value of tracking order progress information and the effect of different lead time distributions. (Gaukler et al, 2008, use a very similar model of order progress information.) Many lead time distributions can be modeled quite closely by this device and in particular deterministic lead times can be approximated arbitrarily closely by letting the number of exponential phases approach infinity.…”