Variability, Inventory Uncertainty and Supply Chains

This session will develop a fundamental understanding of how cycle time variation in stages of a supply chain propagates into measures of overall cycle time. Application can be seen in supply chains and inside plants with batch processes. While the sources of variation are symmetrical and can be modeled as uniform or normal, their effect is one-sided; always worse. A simulation will show how lead times only get longer and “good periods” do not average out. Categories of improvement model including: removing uncertainty at each stage and an inventory control strategy. It will highlight the relationship between maintaining inventory and variation.