The use of advance demand information in a project-based supply chain

K.H. Donselaar, van, L.R. Kopczak, M.J.F. Wouters

Research output: Contribution to journalArticleAcademicpeer-review

33 Citations (Scopus)

Abstract

In a project environment, a manufacturer is confronted with two types of demand: regular demand from many small orders and very irregular, lumpy demand from infrequent, large orders. Manufacturers who build to stock must carry large safety stocks to meet the lumpy demand. As part of the project engineering process, however, project engineers and implementers (e.g. installers) typically have developed information about material requirements well in advance of placement of orders. We analyze the inventory reduction that could be achieved if the installer were to communicate advance demand information (ADI) to the manufacturer. We look at it in particular when the bid is placed. We focus on the following characteristics of available ADI in project environments: First, ADI information is uncertain, because decisions on installer and manufacturer selection have not yet been finalized. Second, information is detailed, available at the item level. We show that ADI is particularly valuable when potential demand for large projects is irregular and when proposals for potential projects have a high probability of leading to orders.
Original languageEnglish
Pages (from-to)519-538
Number of pages20
JournalEuropean Journal of Operational Research
Volume130
Issue number3
DOIs
Publication statusPublished - 2001

Fingerprint Dive into the research topics of 'The use of advance demand information in a project-based supply chain'. Together they form a unique fingerprint.

Cite this