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Finite time horizon fill rate analysis for multiple customer cases

Abbasi, B., Hosseinifard, Z., Alamri, O., Thomas, D. and Minas, JP 2017, Finite time horizon fill rate analysis for multiple customer cases, Omega, pp. 1-17, doi: 10.1016/j.omega.2017.03.004.

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Title Finite time horizon fill rate analysis for multiple customer cases
Author(s) Abbasi, B.
Hosseinifard, Z.
Alamri, O.
Thomas, D.
Minas, JP
Journal name Omega
Start page 1
End page 17
Total pages 17
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2017-03
ISSN 0305-0483
Keyword(s) inventory management
base stock policy
service level agreement
multiple customers
Summary The item fill rate –defined as the fraction of demand that is immediately satisfied from on-hand stock –is commonly used as a performance measure in service level agreements between customers and sup- pliers. Under such agreements, the fill rate is measured over a finite horizon (the performance review period) and the supplier faces a financial penalty if an agreed target is not met. The distribution of the item fill rate (fill rate) determines the probability of exceeding the agreed target, it is therefore a point of interest in SLA coordination. The average finite horizon fill rate decreases with an increase in performance review period length. However, the impact of performance review period length on the shape of the fill rate distribution is not well understood. Past studies of finite horizon fill rate only consider a single cus- tomer in the supply chain. In this study, we analyze fill rate distributions for a supplier that has multiple customers each with their own service level agreement. We examine the effects of performance review period length, choice of demand fulfillment (service) policy and correlation between customers’ demands on both the average fill rate and the probability of achieving the target fill rate. This study provides new insights into service level agreement coordination between suppliers and customers. For instance, the results show that a supplier with multiple customers must take care with choosing a service policy, as rationing will affect the fill rate distribution and hence the realized service level.
Language eng
DOI 10.1016/j.omega.2017.03.004
Field of Research 150309 Logistics and Supply Chain Management
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2017, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30094245

Document type: Journal Article
Collection: Department of Information Systems and Business Analytics
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