BUS606: Operations and Supply Chain Management

The supply chain in the case study consisted of levels 1–3: production and manufacture, general representative, and distribution. For example, Company K is mainly responsible for the first level. In addition to manufacturing brand vehicles in the supply chain, it is also responsible for providing goods to the component repair warehouse. Company H is an automotive brand agent whose two current representative brands include household and large commercial vehicles. In the supply chain, it is mainly responsible for brand marketing and planning, market research, commodity planning, distributional operational management, information systems development, training, after-sales service plans, parts logistics, etc. Conversely, the automotive production assembly and sales are carried out by collaborating manufacturers. With regard to auto repair, Company H serves as a general warehouse for the distribution of parts by purchasing and storing various components from the manufacturer (Company K). Then, the repair parts are supplied to downstream distributors in accordance with the JIT concept.

Following the JIT theory, with the exception of carrying certain parts to cover common repairs, the distributor location warehouse does not stock supplies. When customers at the distribution end go to the garage for vehicle repairs, the technician confirms which parts are needed, then, if the parts are not in stock, the distributor immediately puts in an order to Company H. In this case, the general warehouse distributes parts at specific times twice a day to ensure that the respective distributors receive them in a timely manner and the customer does not have to wait. Since the distributor warehouse maintains extremely low or zeroes stock, the distributor at the supply chain end can quickly respond to customers' needs while adhering to the JIT concept.

Due to the collaborative relationship with the supplier, Company K does not need to stock large qualities to quickly respond to Company H's needs. Although the transport and distribution time between the two companies is in line with the manufacturers' main production and planning schedule, Company K's distribution of repair parts cannot be called timely supply. However, under the collaboration contract, it must not exceed the agreed-upon supply period. Hence, as an effective link in the parts repair supply chain, Company H must quickly supply repair parts to the distributor by providing various inventory quantities in order to serve as the most efficient largest warehouse center in the supply chain. This will ensure a satisfactory experience for the customer and that the distributor location maintains a high service standard. In this case, the distributors are divided by region into eight distributors with a total of 127 locations. These are then subdivided into the 13 most efficient distribution routes. In this study, the case scenario was applied to the four levels of the supply chain. First, the upstream manufacturing supplier of the four vehicle sheet metal components was selected. Then, five sheet metal parts for the four vehicles were chosen as the goods in the model data. Company K was selected as the wholesaler supplier in the model analysis. The northern warehouse was referred to as Company H, the distribution center in the case supply chain. One distribution path was chosen for the model analysis. Since the distribution route was planned and designed by Company H, the number of distribution locations along the routes did not affect the mathematical model analysis. Thus, the number of distribution locations along the route was not taken into account. The related setting of parameters is shown in Table 1 and Appendix A.

In this study, we performed an analysis based on the DC warehouse. As this research has a total of 20 parts, only one part provided by the four suppliers were included in the inventory status chart, with a time period of 120 working days. We also compared Scenario 1 to our proposed four- item model through analysis of the indicator lines on the chart.

Five types of information are presented in the chart: the accumulation of inventory and the indicator lines.

• The quantity of merchandise that has been shipped from the DC warehouse;
• The quantity of inventory currently located at the DC warehouse;
• The maximum quantity of inventory, which is illustrated as an indicator line, is equal to the total quantity that has been shipped and the quantity in inventory. Therefore, if the total amount of these two quantities is higher than the indicator line; this implies that the warehouse is overstocked;
• The safe inventory quantity, which is represented by an indicator line, occurs when the quantity of the inventory is lower than the indicator line. This implies that an urgent order for inventory is required. However, when the inventory is lower than this indicator line for a long period of time, warehouse workers must check if there has been any problem with the ordering or manufacturing process.
• Inventory quantity, which is denoted by an indicator line, represents the peak value of the inventory and is a gauge of the capacity of the warehouse.

In this study, the three indicators of Scenario 1 were applied to the Scenario 2 model comparing the indicator line of the Scenario 1 and the diagram of the quantity of shipped merchandise in the inventory. We also analyzed the difference between Scenario 1 and the inventory quantity using the Scenario 2 model. It also described the advantages of the Scenario 2 model.