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The effect of property rights and audit information quality on team incentives for inventory reduction

Article Abstract:

The impact of limited contractibility and the informational quality of audits on inventory levels and the optimality of organizational structure are examined. The optimality of individual versus team-based production is analyzed in a number of informational environments that vary in the quality of the information that is available for monitoring workers. The results show that team-based production is cost-efficient in environments where high quality information can be obtained even at a high cost. In such environments, the decrease in inventory arises endogenously as an equilibrium outcome. Also examined is the synergy observed between the use of production teams and the decrease in inventory in environments where high quality information is available. In environments where the quality of information declines, the ideal organizational structure is individual production.

Economics, Work groups, Teamwork (Workplace), Information theory, Incentives (Business), Information theory in economics

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Effects of setup and processing time reductions on WIP in the JIT production systems

Article Abstract:

Sarkar and Zangwill's (1991) conclusion that setup and processing time reductions can adversely affect work-in-process inventory in just-in-time systems if variance exists is argued to be incorrect. The validity of their proposition that the reduction of setup time results in the boundless growth of waiting queues becomes questionable when the setup is modelled as a PERT network. Moreover, it is demonstrated that waiting time growth, or the lack thereof, can be determined by the amount of setup time reduced as well as the level of variance. This finding is particularly useful when planning an effective setup reduction project. The Sarkar and Zangwill example is used to emphasize that disproportionate reductions in variances do not necessarily increase the expected waiting time.

Just in time inventory systems, Just in time systems, Queuing theory

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Analysis of a two-echelon inventory control system with complete redistribution

Article Abstract:

A two-level distribution system is examined. A central warehouse (CW) supplies several branch warehouses, which then supply normally-distributed customer needs in a periodic-review environment. The CW replenishes system inventory through base-stock replacement and a predetermined order cycle. Approximate formulae are derived which allow comparison of system-wide inventories relevant to each of two allocation schemes. Limited computational tests reveal what degree of improvements are possible with total redistribution, as well as the improvements' sensitivity to model parameters.

Warehousing

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