Trends and Research in the Decision Sciences: Best Papers from the 2014 Annual Conference

19. Financial Implications of JIT Logistics and Defect Bullwhip Effect

—Kuo-Ting Hung, Sawyer Business School, Suffolk University

—Chanchai Tangpong, North Dakota State University

—Jin Li, North Dakota State University

Abstract

We examine the financial implications on supply chain performance while considering random production process failures and imperfect inspection process in a simple supply chain where defective products from a supplier may propagate and affect the production process of its downstream customers randomly. Our analysis shows that long-run average and the variance of yields of the supply chain decreases as delivery interval increases. The yield fluctuation at each tier of a manufacturing supply chain can create the defect ...