The impact of inventory and flow planning parameters on supply chain performance: An exploratory study

The primary objective of this paper is to study the impact of selected inve ntory parameters and management techniques on the performance of an expande d and comprehensive retail supply chain. Specifically, we study the sensiti vity of supply chain performance to three inventory planning parameters: (i ) the forecast error, (ii) the mode of communication between echelons, and (iii) the planning frequency. We achieve this by constructing a detailed si mulation model and with data adapted from a case study which we were involv ed with. The studies conclude that all the three parameters have a signific ant effect on performance. Increasing forecasting errors and the re-plannin g frequency decreases service, return on investment, and increases cycle ti me. Using a mode of communication that facilitates exchange of information between echelons in the supply chain yields a higher level of service when compared to the scenario where the entities in different echelons plan mate rial flows independently. (C) 2001 Elsevier Science B.V. All rights reserve d.