Desired Supply Line Value Calculation for Multi-Supplier Systems

摘要

Desired Supply Line is the product of expected acquisition lag and desired acquisition rate. This calculation ensures that supply line would produce the desired acquisition rate given that it is at this desired level. A wrongly calculated Desired Supply Line value leads to a steady-state error preventing stock approach its goal. Therefore, correct calculation of Desired Supply Line values is crucial. Desired acquisition rate is equal to the expected loss flow in a single-supplier system. However, it is not easy to decide on the desired acquisition rates for a multi-supplier system. We give a general formula for the calculation of Desired Supply Line values based on the supplier utilization priorities and supplier production/shipment capacities.