A Cost Analysis Of Supply Chain Flexibility Configurations

In this paper, some Supply Chain (SC) configurations based on different degrees of flexibility are considered. The SC flexibility here refers to both process and logistics aspects. Process flexibility concerns the number of product types that can be manufactured in each production site (supplier or assembler); logistics flexibility concerns the possibility of shifting the assignment of an item (component or final product) to different sites of an SC stage. An optimisation model provides the best operations planning performance (lost sales) of a given SC configuration, subject to different values of capacity uncertainty and both volume and mix demand variability. Based on these results, a cost analysis of the different SC configurations is provided, aimed at finding critical ratios among process flexibility, logistics flexibility and lost sale costs, which may drive managers to make appropriate decisions for SC management.