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Supply Chain Design : A Conceptual Model and Tactical Simulations

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SUPPLY CHAIN DESIGN: A CONCEPTUAL MODEL AND TACTICAL SIMULATIONS

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Supply Chain Design: A Conceptual Model and Tactical Simulations

A Dissertation by JEREMY M. BRANN

Submitted to the Office of Graduate Studies of Texas A&M University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY

Abstract:

In current research literature, supply chain management (SCM) is a hot topic breaching the boundaries of many academic disciplines. SCM-related work can be found in the relevant literature for many disciplines. Supply chain management can be defined as effectively and efficiently managing the flows (information, financial and physical) in all stages of the supply chain to add value to end customers and gain profit for all firms in the chain. Supply chains involve multiple partners with the common goal to satisfy customer demand at a profit.

While supply chains are not new, the way academics and practitioners view the need for and the means to manage these chains is relatively new. Very little literature can be found on designing supply chains from the ground up or what dimensions of supply chain management should be considered when designing a supply chain. Additionally, we have found that very few tools exist to help during the design phase of a supply chain. Moreover, very few tools exist that allow for comparing supply chain designs.

We contribute to the current literature by determining which supply chain management dimensions should be considered during the design process. We employ text mining to create a supply chain design conceptual model and compare this model to existing supply chain models and reference frameworks. We continue to contribute to the current SCM literature by applying a creative application of concepts and results in the field of Stochastic Processes to build a custom simulator capable of comparing different supply chain designs and providing insights into how the different designs affect the supply chain’s total inventory cost. The simulator provides a mechanism for testing when real-time demand information is more beneficial than using first-come, first-serve (FCFS) order processing when the distributional form of lead-time demand is derived from the supply chain operating characteristics instead of using the assumption that lead-time demand distributions are known. We find that in many instances FCFS out-performs the use of real-time information in providing the lowest total inventory cost.

ABSTRACT........................................................................................................... iii
DEDICATION ....................................................................................................... v
ACKNOWLEDGEMENTS ................................................................................... vi
TABLE OF CONTENTS....................................................................................... viii
LIST OF TABLES ................................................................................................. xi
LIST OF FIGURES................................................................................................ xiii
CHAPTER
I INTRODUCTION .................................................................................. 1
1.1 Goals of the Dissertation ................................................................ 3
1.2 Organization of the Dissertation..................................................... 4
II SUPPLY CHAIN DESIGN: A CONCEPTUAL MODEL.................... 5
2.1 Need for a Supply Chain Design Model......................................... 8
2.2 Literature Review ........................................................................... 11
2.3 Methodology................................................................................... 15
2.3.1 Research Sample ................................................................. 18
2.3.2 Text Mining Software ......................................................... 19
2.3.3 Text Mining Basics ............................................................. 19
2.3.4 Research Procedure Using the SAS Text Miner ................. 25
2.4 Analyses and Findings.................................................................... 32
2.5 Discussion....................................................................................... 43
2.5.1 The Supply Chain Design Conceptual Model..................... 43
2.5.2 Current Framework Comparisons ....................................... 48
2.5.3 The Pragmatic View of the SCDCM and the Current SCM Frameworks......................................................................... 51
2.5.4 Contributions....................................................................... 56
III ARB: A TOOL FOR COMPARING SUPPLY CHAIN DESIGNS....... 59
3.1 Current Issues ................................................................................. 59
3.2 Rationale for Building the ARB Simulator .................................... 60
3.3 The ARB Model ............................................................................. 61
3.4 ARB Simulator Capabilities ........................................................... 63
3.4.1 Runtime Parameters ............................................................ 64
3.4.2 Model Parameters................................................................ 66
3.4.2.1 Infrastructure Parameters ..................................... 66
3.4.2.2 Process Parameters............................................... 66
3.4.2.3 Item Parameters ................................................... 68
3.4.3 Economic Parameters.......................................................... 69
3.4.4 Reporting Options ............................................................... 69
3.5 Implementation of Capabilities ...................................................... 70
3.6 ARB Simulator Order Processing Policy Implementation............. 73
3.7 ARB Simulator Inventory Cost Policy Implementation................. 76
3.8 ARB Simulation Process ................................................................ 78
3.9 Testing the ARB Model.................................................................. 84
IV COMPARING SUPPLY CHAIN DESIGNS ......................................... 90
4.1 Supply Chain Design Complexity .................................................. 90
4.2 The Use of Real-Time Information in a Production-Distribution Environment ................................................................................... 91
4.3 Simulation Methodology ................................................................ 95
4.4 Research Problem........................................................................... 98
4.5 Experimental Design ...................................................................... 105
4.5.1 Runtime and Infrastructure Parameters.............................. 105
4.5.2 Process, Item, and Economic Parameters .......................... 106
V COMPARING THREE-STAGE SUPPLY CHAIN DESIGNS ............. 109
5.1 Experimental Runs ......................................................................... 109
5.2 Experimental Results...................................................................... 109
5.2.1 Postulate Results ................................................................ 109
5.2.2 Proposition Results............................................................. 111
5.2.2.1 Proposition 1 ......................................................... 111
5.2.2.2 Proposition 2 ......................................................... 119
5.2.2.3 Proposition 3 ......................................................... 121
5.2.2.4 Proposition 4 ......................................................... 125
5.2.2.5 Proposition 5 ......................................................... 127
5.3 Cost Justification of the Zheng and Zipkin Cases .......................... 133
5.4 Conclusions .................................................................................... 134
VI COMPARING FOUR-STAGE SUPPLY CHAIN DESIGNS ............... 136
6.1 Constructing a Four-Stage Supply Chain Model............................ 136
6.2 Four-Stage Supply Chain Research Problem ................................. 139
6.3 Experimental Design ...................................................................... 141
6.4 Experimental Results...................................................................... 141
6.5 Conclusions .................................................................................... 148
VII SUMMARY AND CONCLUSIONS ..................................................... 151
REFERENCES....................................................................................................... 154
APPENDIX A ........................................................................................................ 161
APPENDIX B ........................................................................................................ 175
APPENDIX C ........................................................................................................ 242
VITA ...................................................................................................................... 322

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