The effects of transportation variance and batch sizes on the performance of a supply chain

Inventory management and transportation are important issues in supply chain (SC) management. The application of just-in-time (JIT) to address inventory issues in SC has been investigated by various researchers. JIT requires a reliable transportation system in order to work efficiently. Another issue of importance is transportation batch size. This paper presents the results of simulation experiments to investigate the effect of transportation lead-time variability and batch size on the performance of a four echelon kanban-ConWIP. The performance was evaluated based on customer service level, total system inventories and inventory at individual nodes. The findings of the study show that variance in transportation lead-time must be controlled at low levels. If a fixed batch size is to be specified across the SC, slightly lower batch sizes are preferable to very low or large batch sizes. For variable batch size, it should be fixed at approximately 40% of destination node inventory capacity.