Development of a Novel Lot-sizing Model with Variable Lead Time in Supply Chain Environment

Supply chain management (SCM) addresses the management of materials and information across the entire chain from suppliers to producers, distributors, retailers, and customers. The theory of supply chain management suggests that lead time reduction is the pioneer of using market mediation to reduce transaction uncertainty in the chain, which can be conceptualized as the primary goal of supply chain management. In the past few decades, scholars have had to place attention on the impact of inventory on SCM. This paper is related to the development of a lot-sizing model for a single-component multiple-delivery system with variable demand and lead time of a multinational transformer company. Two models were developed. For the first model, distribution of demand is considered as normal, distribution of procurement lead time is exponential, and the quantity is coming in a single lot. For the second model, distribution of demand is normal, and procurement and administrative delay lead time is exponential, and the quantity is coming in a single lot. Modification of the first model has been incorporated by taking the effect of multiple deliveries on the models and correcting the Re-order point as obtained from the previous models. The results and analysis by the second model have been done for different parametric conditions. The effect of multiple deliveries is also taken into account. The optimum re-order point and economic ordering quantity with various different inputs have been discussed.

Keywords:

Supply chain management , Lot size , Economic order quality , Lead time , Re-order point