The impact of (S, s) policy on supply network performance: a simulation study

This paper builds upon the study by Bottani and Montanari (2011, pp.226-269). Here, the authors presented a simulation model to assess the performance of supply networks, and investigated economic order interval (EOI) and economic order quantity (EOQ) policies under several different operating conditions of the networks, including: the network configuration; the demand behaviour and stochasticity; the lead time stochasticity; the safety stocks coefficient. In this paper, we extend and complete the previous study by investigating the (S,s) policy, i.e., a periodic review policy with re-order points and order-up-to level. To this extent, we start by presenting a model to simulate the (S,s) policy; then, by maintaining the same simulation settings used by the authors and adding the new policy, we investigate 192 scenarios in a 3 × 26 factorial design. We present some selected outcomes from the simulation runs, primarily focused on the comparison of the three reorder policies in terms of their impact on the supply network performance. From those outcomes, we derive interesting guidelines, which allow identifying the most appropriate reorder policy to be adopted in the network as a function of its operating conditions. Findings of this study also provide supply chain managers with an overview of the performance that can be expected when the (S,s) policy is adopted in a supply network.