The impact of product variety on logistics performance

Authors:
Xavier de Groote;Enver Yücesan
Affiliations:
INSEAD, Technology and Operations Management Area, Fontainebleau, France;INSEAD, Technology and Operations Management Area, Fontainebleau, France
Venue:
Proceedings of the Winter Simulation Conference
Year:
2011

Citing 8
Cited 0

Introduction to Simulation and SLAM II (3rd ed.)

Introduction to Simulation and SLAM II (3rd ed.)
Lot sizes, lead times and inprocess inventories

Management Science
Component commonality with service level requirements

Management Science
Broader product line: a necessity to achieve success?

Management Science
Performance analysis of a multi-item production-inventory system under alternative policies

Management Science
The stochastic Economic Lot Scheduling Problem: cyclical base-stock policies with idle times

Management Science
Note: How Does Product Proliferation Affect Responsiveness?

Management Science
Investment Strategies for Flexible Resources

Management Science

Quantified Score

Hi-index	0.00

Visualization

Abstract

We study the impact of product variety on the performance of a simple integrated production-distribution system equivalent to the stochastic economic lot-scheduling problem. We show that, keeping the total demand constant, the expected cost of inventories and backorders increases linearly with the number of products. This result is contrary to the conventional wisdom---based on pooling economies---whereby the expected cost would increase as the square root of the number of products. The linear relationship stems from the increase in replenishment lead time induced by an increase in product variety. In a systematic simulation study we show the phenomenon to be quite robust, as it does not depend on load, flexibility, or processing variability.