An inherent differentiation and system level assessment approach to inventory management: A safety stock method comparison
Journal article, 2019
Design/Methodology/Approach: Due to lack of analytical relationships between the two methods the analysis is based on event-driven simulations. Data is collected from eight different case companies.
Findings: Findings explain the importance of assessing safety stock performance for groups of items and not for individual items, as is common in academic studies. It explains how the methods’ inherent differentiation and planning environment characteristics affect the relative performances of the two safety stock methods.
Research implications: The study explains the importance of assessing performance of safety stock methods on a system level, rather than on item level measures. It explains why the demand fill-rate method has a negative impact on performance for groups of items, while the number-of-days method has a positive impact. The study also explains how the group-level safety stock performance is affected by five demand data characteristics.
Practical implications: Understanding the necessity of system level assessment of safety stock performance, how methods inherently differentiate service levels, and how demand characteristics affect methods’ performance can guide the choice of safety stock methods in companies.
Originality/value: No research on the characteristics of the number-of-days safety stock method, any assessment of differentiation characteristics of and comparison with the demand fill-rate method, has been published. The variable ‘inherent differentiation’ is also introduced and defined.
Chalmers, Technology Management and Economics, Supply and Operations Management
Stig Arne Mattsson
International Journal of Logistics Management
0957-4093 (ISSN)Vol. 30 2 663-680
Production Engineering, Human Work Science and Ergonomics
Transport Systems and Logistics
Other Engineering and Technologies not elsewhere specified
Areas of Advance