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Mitigating the Impact of Lead Time Variability – UA13-DLA – Phase III

Sponsor:

Defense Logistics Agency Thrust Area: Inventory

Research Team:

Manuel D. Rossetti (PI), Juliana Bright (RA)

University Involved:

Department of Industrial Engineering – University of Arkansas

Start Date:

September 2012

End Date:

December 2013

Summary:

The main goal of this research is to model the effect of lead-time variability on the DLA’s logistics system and to develop methods to incorporate this information into inventory policy setting and planning. The key parameters for inventory policy setting include characterizations of lead-time, demand, and costs (e.g. holding, ordering, back ordering, etc.). The information on the lead-time and the demand is combined into a model of demand during lead-time and used in inventory stocking models. These models enable the setting of safety stock values in order to minimize cost at acceptable service levels. Current models used within the DLA do not adequately account for the variability in lead-time. In addition, methods for how to characterize the lead-time (i.e. estimate mean values, variances, 85th percentile, etc.) and incorporate measures of uncertainty in lead-time into planning models are not well understood. This research will investigate how to properly incorporate lead-time variability into DLA inventory planning systems by analyzing current methods, developing new models, and comparing the impact of the models on the cost, availability, and operational performance of the DLA’s logistics systems.

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