Average lead time

Finally, the timestamp rf , / p,l e Ivcl is defined to indicate the average lead time measured in planning periods compared to the first raw material initialized with timestamp 1. Increase of the timestamp is caused by transportation e.g. between different continents, holding inventories or the further production processing in the value chain. 

Table 4.4 summarizes the effect of increasing the arrival rate of students while maintaining the service rate of six orders per hour. For each pair of arrival and service rates, the queueing template was used to obtain the average work-in-process inventory and the average lead time. 

Arrival Rate Average Work-in-Process Average Lead Time... 

In particular, consider an alternate proposal for the rail option, whereby the trains travel at a lower average lead time that is less variable. Since transport cost per unit of train shipments is low, these lower average lead time and less variability could reduce both the in-transit inventory holding costs to ship by rail and the associated safety stock. We examine next the impact of these changes on the total supply chain cost experienced by the shipper. 

Note that supply chains are replenishment systems, thus the average amount shipped should match the average demand. If the transport lead time were L, the average in transit inventory is LD. Notice that this is just Little s law from queueing theory, which says that the average work in process inventory is equal to the demand rate times the average lead time through the system. 

Notice that the equation above is Litde s law, which states that the average number of units in a queue is the demand rate times the average lead time. Little s law links lead time to work in process inventory. In our case, the inventory in transit is work-in-process inventory between the component plant and the assembly plant where it is required. Once we get the average in-transit inventory, we merely have to multiply it with the holding cost per unit per unit time to get the holding cost associated with the in-transit inventory. 

As an example of the impact, analysis of shipment data from Campbell s Soup to a retail chain warehouse showed that after VMI, average lead time decreased from 10.8 days to 3.6 days, and standard deviation of lead time decreased from 3.5 to 2.8 days. Thus, after VMI, on-hand inventory at the warehouse dropped from 3.4 weeks to 1.8 weeks while service levels improved. The reasons for this improvement under VMI included smaller deliveries due to increased delivery frequency and a smaller supplier lead time. 

The MRP calculation also requires that the MPS be known. It is generally recommended that the planning horizon for the MPS be at least as large as the average lead time of the end items produced by the facility. This allows the MPS to be stable, which then means that the requirements being conducted in the MRP have some validity. 

Wein [109] studies DDM under the objective of minimizing the weighted average lead time subject to Tmax (Problem I) and T7nax(Problem II). He con-... 

Buyer s lead time constraints (use weighted average lead time)... 

Average Lead Time Requirements of the Buyers (Exercise 5.15)... 

Buyer 1 The weighted average lead-time is 12.5 days for product 1 and 18 days for product 2 as follows ... 

The product of lead-time of each product and quantity supplied is summed over all the products, buyers, and suppliers and should be minimized. This represents weighted average lead-time. 

The first objective function (7.23) minimizes the total purchasing cost. Purchasing costs has two components, total variable cost (TVC) a.nd fixed cost (FC). TVC constitutes the first part and PC is the second part of Equation 7.23. Note that FC depends on whether a supplier is selected or not therefore, we use the binary variable Zj. in the expression of FC. The second objective (7.24) represents MtT risk for quality resulting from past transactions with the suppliers. The third objective refers to the minimization of average lead time (725). Note that Dy is a constant and can be removed during the optimization process. The fourth objective in (7.26) minimizes VaR risk of supply disruptions due to hurricanes. We model the quality objective as an S-type MtT risk (see Figure 76). The calculations of exact mathematical expressions for VaR and MtT type risks for the different suppliers are given in Section 714.5. ... 

X Average lead time Average time needed from the first to the last timestamp a company defines in its supply chain (in days) X X X 1-8 14-16 19 21-23 25 27 29-30 40 3... 

Average lead-time required Short (24 hour) Medium (48 hour) Medium (48 hours)... 

The re-order system will require a calculation taking into account stock turn, lead times, and a reserve level to determine a re-order level. It is important in the grocery industry not to hold too much stock not only because of the financial cost of holding stock and limited shelf space, but also the perishability of food items (used by dates). It is also important not to run out of stock. The calculation of a re-order point is important Bar coding updates information of average lead times, average demand and adjusts for seasonal ups and downs. 

Set the customer lead-time objective based on market conditions. This will set the "order taking period" which is the size of the window for each order. In Figure 44.2, the average lead-time is 10 weeks the peak is 12 weeks. If all customers would accept this lead time, then theoretically TLC orders to AG R could be 100% BTO. Since that was not the case, it had to stock medium and high movers. 

Average lead time when using link u between supplier k and plant m... 

Under this replenishment policy, we have Average demand per week, D = 2,500 Standard deviation of weekly demand, = 500 Average lead time for replenishmenL L = 2 weeks Reorder point, ROP = 6,000 Average lot size, Q = 10,000... 

D Average demand per period (To. Standard deviation of demand per period L Average lead time for replenishment Si. Standard deviation of lead time... 

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