Decision Sciences Journal
Volume 32, Number 4
Fall 2001
The Value of Production Schedule Integration in Supply Chains
Lee Krajewski and Jerry C. Wei
The University of Notre Dame, Mendoza College of Business Administration,
Notre Dame, IN 46556, krajewski.2@nd.edu and wei.1@nd.edu
ABSTRACT. This study explores the value of integrated
production schedules for reducing the negative effects of schedule
revisions in supply chains involving buyer and supplier firms.
A stochastic cost model is developed to evaluate the total supply
chain cost with integrated purchasing and scheduling policies.
The model minimizes the costs associated with assembly rate adjustment,
safety stock, and schedule changes for all supply chain members.
Through experimentation, the paper examines the impact of several
environmental factors on the value of schedule integration. This
study finds that schedule integration can lead to overall cost
savings in a supply chain, but some firms may have to absorb
costs in excess of those they would incur with independent scheduling.
Environments with high inventory holding costs and long supplier
lead times may not find it beneficial to adopt an integrated
schedule. Forecast effectiveness plays a critical role in realizing
the benefits of schedule integration. The paper concludes with
suggestions for future research.
Subject Areas: Inventory Management, Master Production
Scheduling, Stochastic Processes, and Supply chain management. |