A proposal of analytical formulations to calculate safety lead times under demand variability. A case study

Abstract

This paper deals with the issue of safety lead time (SLT) calculations in production-inventory systems in presence of both demand and replenishment lead time variability. We provide some formulations of the SLT and numerically show their performance as compared to a benchmark in the literature. Thus the main objective of this paper is to provide analytical formulations to calculate the SLT that contemplate demand variability. To this end, a literature review was done to analyze the approaches and justifications of the different revised research works to identify reference formulations according to the objectives of this work. A supply chain from the automotive sector was used as the study frame and to validate the proposed formulations. This supply chain involved two companies: a car manufacturer and a first-tier supplier. In order to compare the proposed formulations with one another, and with that currently used by the first-tier supplier and is the study object, three parameters were used: safety stock, the number of times stockout occurs and the mean stock. They allowed the final selection of the most suitable SLT formulation for each case study.

Keywords

• Inventory control
• Safety lead time
• Supply chain management
• Demand uncertainty
• Automotive industry
• Case study