The effects of transportation lead-time and safety stock in international co-operative knockdown production systems

Abstract

Abstract. In international co-operative knockdown production systems (ICKDPS), much longer transportation lead-time than production lead-time to procure component parts is required, because the parts are generally containerized by ship. In this paper, in order to determine an economical buffer stock level for a more reliable ICKDPS, a pull-type ordering system which considers the backorder for compensating for shortage of component parts is developed for the ICKDPS as a three-stage production, inventory and transportation system with the concept of 'just-in-time’ production systems. In addition, the effects of transportation lead-time and buffer stock level on the quantity of backlogs and the probability of requirement are clarified by simulation.