TY - JOUR
T1 - The use of advance demand information in a project-based supply chain
AU - Donselaar, van, K.H.
AU - Kopczak, L.R.
AU - Wouters, M.J.F.
PY - 2001
Y1 - 2001
N2 - 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.
AB - 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.
U2 - 10.1016/S0377-2217(99)00411-7
DO - 10.1016/S0377-2217(99)00411-7
M3 - Article
VL - 130
SP - 519
EP - 538
JO - European Journal of Operational Research
JF - European Journal of Operational Research
SN - 0377-2217
IS - 3
ER -