Tactical Planning Models for Supply Chain Management

Supply chain management refers to efficient operation paradigms related to procurement of raw material, transforming them into semi-finished and finished products and distributing them to the end customer, thereby transcending multiple business units. Poor supply chain management (more often than not) predominantly results in excessive amounts of inventory, the largest asset for many firms. Inventory is generally carried by firms to hedge against uncertainty of different types (demand, process and supply). Thus, efficient coordination of the supply chain relies heavily on how well the uncertainties related to demand, process and supply are managed. Although, it would be ideal from a research standpoint to develop large scale integrated models consisting of multiple entities while trying to understand effective supply chain practices, it is often very difficult (and in most cases impossible) to get any useful insights from such large models because they are intractable. As a result, researchers in the area of operations management over the past 50 years have tried to develop insights on simpler models which could then be used as building blocks to study more complex and real supply chains. The approach adopted has been one where one decomposes a multi-level supply chain and analyze individual facility under different conditions, such models will be the main focus of this paper. ∗Currently a visiting associate professor at the Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC-27599