Hau L. Lee

The bullwhip effect in supply chains

This publication contains reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles.

Aligning supply chain strategies with product uncertainties

This publication contains reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles.

Economic Production Cycles with Imperfect Production Processes

Abstract In this paper, we study the effects of an imperfect production process on the optimal production cycle time. The system is assumed to deteriorate during the production process and produce some proportion of defective items. The optimal production cycle is derived, and is shown to be shorter than that of the classical Economic Manufacturing Quantity model. The analysis is extended to the case where the defective rate is a function of the set-up cost, for which the set-up cost level and the production cycle time are jointly optimized. Finally, we also consider the case where the deterioration process is dynamic in its nature, i.e., the proportion of defective items is not constant. Both linear, exponential, and multi-state deteriorating processes are studied. Numerical examples are provided to illustrate the derivation of the optimal production cycle time in these situations.

Lot Sizing with Random Yields: A Review

This paper reviews the literature on quantitatively-oriented approaches for determining lot sizes when production or procurement yields are random. We discuss issues related to the modeling of costs, yield uncertainty, and performance in the context of systems with random yields. We provide a review of the existing literature, concentrating on descriptions of the types of problems that have been solved and important structural results. We identify a variety of shortcomings of the literature in addressing problems encountered in practice, and suggest directions for future research.

Mitigating supply chain risk through improved confidence

Todays marketplace is characterised by turbulence and uncertainty. Market turbulence has tended to increase for a number of reasons. Demand in almost every industrial sector seems to be more volatile than was the case in the past. Product and technology life‐cycles have shortened significantly and competitive product introductions make life‐cycle demand difficult to predict. At the same time the vulnerability of supply chains to disturbance or disruption has increased. It is not only the effect of external events such as wars, strikes or terrorist attacks, but also the impact of changes in business strategy. Many companies have experienced a change in their supply chain risk profile as a result of changes in their business models, for example the adoption of “lean” practices, the move to outsourcing and a general tendency to reduce the size of the supplier base. This paper suggests that one key element in any strategy designed to mitigate supply chain risk is improved “end‐to‐end” visibility. It is argued that supply chain “confidence” will increase in proportion to the quality of supply chain information.

Material management in decentralized supply chains

A supply chain is a network of facilities that performs the functions of procurement of material, transformation of material to intermediate and finished products, and distribution of finished products to customers. Often, organizational barriers between these facilities exist, and information flows can be restricted such that complete centralized control of material flows in a supply chain may not be feasible or desirable. Consequently, most companies use decentralized control in managing the different facilities at a supply chain. In this paper, we describe what manufacturing managers at Hewlett-Packard Company (HP) see as the needs for model support in managing material flows in their supply chains. These needs motivate our initial development of such a model for supply chains that are not under complete centralized control. We report on our experiences of applying such a model in a new product development project of the DeskJet printer supply chain at HP. Finally, we discuss avenues to develop better ...

Strategic analysis of integrated production-distributed systems: models and methods

This paper presents a comprehensive model framework for linking decisions and performance throughout the material-production-distribution supply chain. The purpose of the model is to support analysis of alternative manufacturing material/service strategies. A series of linked, approximate submodels and an heuristic optimization procedure are introduced. A prototype software implementation is also discussed.

Manufacturer Benefits from Information Integration with Retail Customers

Information integration efforts between manufacturers and retailers, in the form of information sharing, synchronized replenishment, and collaborative product design and development, have been cited as major means to improve supply chain performance. This paper develops a conceptual framework that relates information-integration initiatives to manufacturer profitability. The framework allows such initiatives to impact inventory management and revenue-enhancing measures that, in turn, increase manufacturer profit margins, or affect profit margins directly. Through an extensive survey in the food and consumer packaged goods industry, we empirically examine this framework. The analysis reveals that the various integration techniques are differentially associated with manufacturer performance. Collaborative planning on replenishment, in the form of vendor-managed inventory (VMI), is directly and positively related to manufacturer margins, while collaboration on new products and services is positively related to intermediate performance measures. Specifically, this latter form of collaboration allows the manufacturer to charge higher wholesale prices and, interestingly, is associated with lower retailer, and consequently manufacturer, stockouts. In contrast, collaboration on the handling of excess and defective retailer inventory (i.e., reverse logistics) results in higher manufacturer stockout levels, on average. Solely sharing information on either inventory levels or customer needs is associated with higher manufacturer performance measures up to a certain point; sharing this information is prevalent among manufacturers that achieve industry-average profitability relative to those that achieve below industry-average profitability. The paper explains these results in the context of the conceptual framework developed and discusses the managerial implications for effective coordination between supply chain partners.

e-Business and Supply Chain Integration

e-Business has emerged as a key enabler to drive supply chain integration. Businesses can use the Internet to gain global visibility across their extended network of trading partners and help them respond quickly to changing customer demand captured over the Internet. The impact of e-business on supply chain integration can be described along the dimensions of information integration, synchronized planning, coordinated workflow, and new business models. As a result, many of the core supply chain principles and concepts can now be put into practice much more effectively using e-business. Significant value can be created by e-business enabled supply chain integration.

Effective Inventory and Service Management Through Product and Process Redesign

One of the major challenges to operational managers is product proliferation. Product proliferation makes it difficult to forecast demands accurately, and consequently, leads to high inventory investment and poor customer service. Such proliferation is often a result of the global nature of the market place. Different markets may have different requirements for the product, due to differences in taste, language, geographical environment, or government regulations. Another reason for product proliferation is the expansion of the customer base. Different product versions are often developed for different market segments e.g., education, personal, business, or government users may have different needs of a product. To gain control of inventory and service, significant benefits can be obtained by properly exploring the opportunities in the design of the product or the process by which the product is made. Logistic issues like inventory and service are thus important dimensions that design engineers should consider, in addition to measures like functionality, performance, and manufacturability. This paper describes how some simple inventory models can be used to support the logistic dimensions of product/process design. Actual examples are used for illustration.