Impact of Inventory Holding Costs in Cpfr Collaboration Strategy

Raj Kamalapur, University of Wisconsin - Oshkosh

ABSTRACT
Discrete-event simulation is used to investigate the impact of different inventory holding costs in Collaborative Planning, Forecasting and Replenishment (CPFR) strategy on total inventory management cost for both the manufacturer and retailer. Generally, when calculating the cycle stock inventory or safety stock inventory, the inventory holding cost of the product is usually not considered. The results from this study suggest that when inventory holding cost is high, it is important to focus on increasing the production capacity, increasing the customer service level and reducing delivery lead time to gain maximum benefits of CPFR collaboration strategy for both the manufacturer and retailer.

(Return to Program Resources)

Updated 03/19/2014