Supply chain management strategies for short life cycle products
                         Jain, Nikhil Trishpal; PhD

                         THE UNIVERSITY OF TEXAS AT AUSTIN, 1998

                         This research addresses issues pertaining to the management of supply chains in a short life cycle
                         environment. Shorter product life cycles present new challenges to managing production and logistics
                         not adequately addressed in supply chain literature. This dissertation attempts to bridge this gap in the
                         literature by developing models that incorporate the unique characteristics of fast-paced industries.
                         Moreover, we explore the supply chain issues from a cross-functional perspective by integrating
                         marketing and operational decisions. In the first part of this research, we investigate conditions under
                         which it is profitable for manufacturers to disregard Laggards--customers who buy a product towards the
                         end of its life cycle. We base our study in the context of the business environment faced by direct sales
                         manufacturers in the personal computer industry. Using an analytical model that integrates innovation
                         diffusion dynamics with supply-side dynamics we provide a systematic approach that can guide firms in
                         making decisions on the portion of the potential market that they should plan to serve. The analysis also
                         provides a characterization of the optimal procurement policy over the life cycle of the product. In the
                         second part of the research, we compare the direct and indirect models of distribution for short life cycle
                         products. First, we develop optimal inventory policy of an indirect manufacturer by explicitly taking into
                         account the stochastic demand process transferred by the retailer to the manufacturer. Second, we
                         demonstrate that due to the special inventory cost structure of the technology-based short life cycle
                         products, inclusion of an additional stage in the distribution channel has a significant negative impact on
                         the total supply chain costs. Finally, we offer an explanation for demand distortion that can occur in short
                         life cycle supply chains. In the third study, we develop a model that takes advantage of real time demand
                         information in making inventory management decisions. Using time series demand data from a personal
                         computer manufacturer, we develop a methodology to estimate the distribution of demand. We then
                         formulate a finite horizon stochastic dynamic program that dynamically adjusts inventory levels using the
                         updated demand information. Solution of the dynamic program indicates that significant savings in
                         inventory-related costs can be realized by using the proposed methodology.

Social Systems Simulation Group
P.O. Box 6904
San Diego, CA  92166-0904
Roland Werner, Principal
Phone/FAX  (619) 660-1603

Copyright © 1996-2004 Social Systems Simulation Group.
All rights reserved.