The effect of labour costs, holding costs, and uncertainty in demand on pull inventory control policies

Multi-plant coordination has been complicated by the recent trend towards globalization. In this paper, a model that simultaneously establishes values for various aggregate parameters such as target inventories and also identifies characteristics of the best pull control strategy is applied to a specific global manufacturing network. A simulation study is done to explore the effect of labour costs and holding costs on target inventories, actual inventories and pull control strategy. A second simulation experiment is used to examine the effect of variability in demand on these same decision variables. Implications for management are discussed and suggestions for further work are presented.