Throughput/inventory dollar-days: TOC-based measures for supply chain collaboration

Mahesh Gupta and Soeren Andersen

International Journal of Production Research, 2018, vol. 56, issue 13, 4659-4675

Abstract: As the semiconductor industry moves away from vertical integration, performance measures play an increasingly important role to ensure effective collaboration. This paper demonstrates that the theory of constraints (TOC)-based measures, Throughput and Inventory Dollar-Days (T/IDD), induce autonomous supply chain (SC) links to function as a synergistic whole and thereby, improve the performance of the whole SC network significantly. We model an SC network of a well-known TOC case study using discrete event simulation and discuss managerial implications of these measures via a set of scenarios. The scenarios explain how these measures – without sharing sensitive financial data – allow members of an SC network to monitor both the effectiveness (TDD) and efficiency (IDD) of SC members and lead them to create win-win solutions following well-known TOC-based planning and control concepts. We conclude this paper by discussing some limitations of the proposed research and provide directions for future theoretical research.

Date: 2018
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DOI: 10.1080/00207543.2018.1444805

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