Application of Postponement Strategy in Distribution Period for Treating Uncertain Demand in Supply Chain Management

Overview & Synopsis

Uncertain demand is one of the most important uncertainties in supply chain management. Different from the traditional methods, such as dynamic inventory control, estimation of demand, we propose to apply postponement strategy to treat uncertain demand in the process of distribution in supply chain. Postponement has been appreciated in recent decades, mainly in manufacturing period of realizing mass customization and decoupled system. With postponement strategy, we could address demand with very different quantity. Based on assumption of ideal cooperation among all the enterprises in the same supply chain, a linear programming model is generated, with bi-objective of minimizing the inherent costs of goods and transportation cost. Through tested in an example numeric, it is demonstrated feasible to reschedule supply chain regardless of quantity of demand and to supply different replenishment strategy for decision maker.