An analysis of the effect of supply chain and manufacturing parameters on inventory cost reduction for push type manufacturing systems

In the global network of businesses, supply chain and order fulfillment managements are the most critical functional departments to determine the winner of the global competition. In this research a network of companies that are flowing information, product and services between providers and a receiver is investigated in order to gain a better insight of the current situation. Analyses, explanations and solutions were developed through responding to the following research questions: (1) What are the most important variables that affect the quality and delivery performances of a supply chain? (2) What are the most important variables that affect the service rate or fill rate of a supply chain of a manufacturing company? (3) What levels of the selected variables could be used in order to minimize inventory on hand?;The research was based on the analysis of a supplier network of a midwestern manufacturing company. Initial study verified that there was no company policy established to prevent stock-outs resulting from late deliveries or quality nonconforming parts.;In order to investigate the effects of existing company policies and guidelines a discrete event simulation model was developed. During the model building phase historic data was utilized to create simulation parameters. Analysis of the historic data revealed that neither the production lead time nor the schedule changes affect the quality or delivery performance of suppliers.;The results of the simulation confirm the importance of the number of suppliers in a supply chain. The number of suppliers negatively affects the efficiency of the order fulfillment process and high numbers of suppliers require higher inventory levels. The company's supplier classification guideline was also validated for delivery performance ratings by the simulation model. However, the supplier classification based on the quality performance was not found to be practically significant.