Supply-Chain Analysis at Volkswagen of America

Nejat Karabakal, Ali Günal and Warren Ritchie
Additional contact information
Nejat Karabakal: IBM Supply- Chain Optimization Practice, 2405 Bunker Hill, Ann Arbor, Michigan 48105
Ali Günal: Production Modeling Corporation, Three Parklane Boulevard, Dearborn, Michigan 48126
Warren Ritchie: Volkswagen of America, 3800 Hamlin Road, Auburn Hills, Michigan 48326

Interfaces, 2000, vol. 30, issue 4, 46-55

Abstract: In 1995, Volkswagen of America began a review of its vehicle-distribution system looking for opportunities to improve customer responsiveness and simultaneously reduce system costs. An analytical tool was required to evaluate alternative designs in terms of cost and customer service level, both of which are functions of probabilistic and dynamic elements. These elements include inventory policies, demand seasonality and volume, customer-choice patterns, and transportation delays. By using an innovative combination of simulation and discrete optimization models, we addressed the problem of analyzing a large number of alternatives efficiently. Our analysis indicated opportunities for significant savings in estimated annual transportation costs, and it provided insights on how to implement the proposed system.

Keywords: INDUSTRIES—TRANSPORTATION; SHIPPING; MARKETING—CHANNELS OF DISTRIBUTION; SIMULATION—APPLICATIONS (search for similar items in EconPapers)
Date: 2000
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