Re-engineering Manufacturing Logistics : Sequencing and Merging

The paper is motivated by real problems encountered in a manufacturing and distribution process. We investigate the impact on the cost of safety stock in the supply chain of a product family in the context of re-engineering the manufacturing and distribution process. The pipeline hedging method is used to derive a model for estimating the safety stock cost in a supply chain. We use the concept of re-engineering the manufacturing and distribution process to minimize the cost of safety stock for a speci ed service level. The product family consisting of one product and two-product are studied in detail. Conditions and insights for better supply chain management are developed. These conditions and insights enable us not only to decide when the process re-engineering is appropriate, but also to suggest the scale and the format of the process re-engineering. Based on above results, two procedures, namely re-sequencing and merging, are developed. Finally, we demonstrate how these procedures can be extended to the product family consisting of multiple products in a hierarchical manner.