Finite time horizon fill rate analysis for multiple customer cases

Abbasi, B, Hosseinifard, Z, Alamri, O, Thomas, D and Minas, J 2018, 'Finite time horizon fill rate analysis for multiple customer cases', Omega, vol. 76, pp. 1-17.

Document type: Journal Article
Collection: Journal Articles

Title Finite time horizon fill rate analysis for multiple customer cases
Author(s) Abbasi, B
Hosseinifard, Z
Alamri, O
Thomas, D
Minas, J
Year 2018
Journal name Omega
Volume number 76
Start page 1
End page 17
Total pages 17
Publisher Pergamon Press
Abstract 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 suppliers. 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 customer 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.
Subject Operations Research
Logistics and Supply Chain Management
Keyword(s) Base stock policy
Inventory management
Multiple customers
Service level agreement
DOI - identifier 10.1016/
Copyright notice © 2017 Elsevier Ltd. All rights reserved.
ISSN 0305-0483
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