COST & SERVICE LEVEL MANAGEMENT
Balancing Cost and Service Level Based on Marketing Strategies
A common theme is how supply chain teams face a daunting task every day: minimize your supply chain costs delivering great customer service. When designing supply chains, firms are often faced with the competing demands of improved customer service and reduced cost. We propose a solution approach based on algorithms that can generate optimal solutions. Besides a significant service improvements can be achieved relative to the minimum cost, the challenger is let the management decision based on accurated data, according to the marketing strategy.
One of the key elements of this balancing act is to establish the right safety stock inventory policies. The complex nature of this can require weeks or months to solve using spreadsheets, producing inflexible and approximate rules-of-thumb that can’t stand up to real-world market dynamics and business changing conditions.