Forward Spare Parts Supply Chain for the Chinese Market

This research project, conducted at Royal Philips in Best, investigates the Chinese spare parts supply chain con guration in terms of total costs, material availability and waiting time. The con guration of the Chinese supply chain, without Hong Kong and Taiwan, is examined. The key variables in this con guration are the replenishment and the emergency shipments, where for both variables the location, time, and related costs are iterated. For each supply chain con guration the performance is evaluated by means of the basestock optimization model of Kranenburg and Van Houtum (2009). Kranenburg and Van Houtum’s model is employed because it allows lateral transshipments and emergency shipments. This mathematical model is adjusted according to the characteristics of the current supply chain. Next, the adjusted model is complemented with a Greedy heuristic to approach the optimal basestock levels. While nding these optimal basestock levels, the model is subject to a service level constraint, which is the material availability. The application of the model applied in this research shows the dependency between the control parameters. These control parameters are tested to improve the current supply chain con guration. This research answers the question whether Regional Distribution Center (RDC) Singapore should also be used for replenishment or whether this RDC could be entirely disregarded. Moreover, both the benefi ts of faster replenishment and slower emergency shipments are evaluated.

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