Quick response procurement cost control strategy for fabric manufacturing

Abstract

This paper considers a material management decision making problem with information revision of a fabric manufacturer, facing highly uncertain material supply and quick response demand. We construct a model by analysing the decision process, derive the optimal solution and study the interaction among factors through a practical data based computational simulation. The demand information, in terms of estimated volume, modifiable order, and order confirmation respectively, is provided by the final buyer to the fabric manufacturer in consecutive time periods. We investigate normal and urgent raw material (yarn) purchasing costs, holding cost, overstock salvage cost, as well as availability of raw materials for urgent order. The model for a single item is then extended to that for multiple items with the capacity constraint. The research shows that a fabric manufacturer plays a critical role in operations efficiency and overall cost control in a typical apparel supply chain, and reveals the cost trade offs between purchasing and inventory under this special business environment.

Keywords:

• Quick response
• Inventory
• Supply chain management
• Textile industry

Acknowledgements

This research is partially supported by the Hong Kong Polytechnic University Research Grant A628.