Analytical insights for supply chain cost and leadtime changes

As a result of companies' efforts to improve supply chain efficiency, changes happen in existing supply chains on an ongoing basis. Cost cutting and leadtime reduction are very common among supply chains and this dissertation investigates two research questions related to them: first, what cost and leadtime changes improve supply chain performance; second, how do cost and leadtime changes affect supply chain safety stock?; Part I of this dissertation investigates the first research question. We consider a two-stage serial line supply chain. Stages are sourced from respective sets of available options, which are defined as leadtime and cost pairings. Total landed cost, defined as the sum of safety stock cost, pipeline stock cost and cost of goods sold (COGS), is used as a metric for supply chain performance. We use the existing versus candidate option framework to model the changes in the supply chain, and derive the sufficient condition for when candidate options have lower total landed cost than existing options. Our main insights include: the downstream stage has more opportunity to realize the benefit of a higher cost lower leadtime candidate option; synchronizing the options at both stages is usually beneficial to the supply chain; and under certain conditions, changing options at one stage may be better than changing options at both stages.; Part II of this dissertation approaches the second research question. The main insights include: cost and leadtime jointly determine the optimal safety stock cost and safety stock placement in the supply chain; and the optimal safety stock policy may not change when supply chain options are changed.