Quotation Gläßer, Dominik, Rabta, Boualem, Reiner, Gerald, Alp, Arda. 2010. Evaluation of the Dynamic Impacts of Lead Time Reduction on Finance Based on Open Queueing . In: Rapid Modelling and Quick Response – Intersection of Theory and Practice, Hrsg. Gerald Reiner, 145-161. London: Springer.


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Abstract

The basic principles of rapid modelling based on queueing theory, that provide the theoretical foundations for lead time reduction, are well known in research. We are globally observing an underinvestment in lead time reduction at top management levels. In particular, the maximization of resource utilization is still a wide-spread aim for managers in many companies around the world. This is due to inappropriate performance measurement systems as well as compensation systems for managers which neglect the monetary effects of lead time reduction. Therefore, we developed a model based on open queueing networks to evaluate the financial impacts of lead time reduction. Illustrated by an empirical case from the polymer industry, we will demonstrate the impact of performance measures on financial measures. That is why we will take into consideration efficiency performance measures (work in process, lead time, etc.) as well as effectiveness performance measure (e.g., customer satisfaction, retention rate). Based on our evaluation model, we will be able to investigate different scenarios to reduce lead time for the given case and evaluate these, based on the developed overall performance measurement model, i.e., optimization of the batch size, resource pooling, de/increase in the number of resources. In particular, we achieved a 75% lead time reduction and a 11% overall cost reduction (resource costs, setup costs, WIP costs, penalty costs, inventory costs) without changing the whole production layout or making high investments. KeywordsQueueing Networks-Rapid Modelling-Manufacturing Systems-Lead Time Reduction-Financial Evaluation

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Publication's profile

Status of publication Published
Affiliation External
Type of publication Chapter in edited volume
Language English
Title Evaluation of the Dynamic Impacts of Lead Time Reduction on Finance Based on Open Queueing
Title of whole publication Rapid Modelling and Quick Response – Intersection of Theory and Practice
Editor Gerald Reiner
Page from 145
Page to 161
Location London
Publisher Springer
Year 2010
Reviewed? Y
URL https://link.springer.com/chapter/10.1007/978-1-84996-525-5_11
ISBN 978-1-84996-524-8
Open Access N

Associations

People
Reiner, Gerald (Details)
External
Alp, Arda (Université de Neuchatel, Switzerland)
Gläßer, Dominik (Université de Neuchatel, Switzerland)
Rabta, Boualem (Alpen-Adria-Universität Klagenfurt, Austria)
Research areas (ÖSTAT Classification 'Statistik Austria')
1133 Computer-aided simulation (Details)
5307 Business and management economics (Details)
5316 Industrial management (Details)
5326 Production research (Details)
5354 Business logistics (Details)
5365 Quality management (Details)
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