The impact of lead time reliability in freight transport: A logistics assessment of transport economics findings

Wout Dullaert and Luca Zamparini

Transportation Research Part E: Logistics and Transportation Review, 2013, vol. 49, issue 1, 190-200

Abstract: This paper considers speed and reliability, measured by the average and variance of the lead time, to examine the relevance of the latter variable on inventory costs. By using a flexible simulation framework, it is shown that reducing variability does not necessarily reduce costs and might in fact increase the costs of safety stock, depending on the shape of the demand distribution during lead time and the targeted service level. This offers a novel explanation for the wide variety of value of reliability figures obtained in empirical transport economics research.

Keywords: Freight transport; Value of reliability; Safety inventory; Simulation framework (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:49:y:2013:i:1:p:190-200

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DOI: 10.1016/j.tre.2012.08.005

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