Sponsor:

Leggett & Platt

Research Team:

Wooseung Jang, James S. Noble, Na Deng

Universities Involved:

University of Missouri

Start Date:

06/01/08

End Date:

05/31/09

Summary:

The objectives of this project are to identify potential opportunities for cost savings by consolidating international shipments, consider frequent and small-volume shipments, and sea-road transportation, develop mathematical models for shipment consolidation, and propose practical solutions fitting situations in Legget & Platt
Leggett & Platt has approximately 200 branches in the USA and 100 branches overseas. The international branches provide a significant quantity of ocean shipping containers. Currently, each branch in U.S. orders items directly from the vendors overseas using an independent inventory replenishment strategy. Because item demands in each branch are often small, they must wait to order a whole container. Therefore, the order quantity becomes very large while the order frequency is quite low. This replenishment policy results in high inventory cost and long turnover cycles. In addition, it requires a higher safety stock level to meet various customer demands. Due to the complexity and extent of the international logistics network there are several potential inventory replenishment and shipment consolidation strategies that can be explored in order to reduce overall logistics costs, while both improving shipping visibility and customer service.