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Trade-Off Between Service and Inventory Costs

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Trade-off between service and inventory costs
Rationalizing safety stock settings within NXP Semiconductors by M.W.H. Roeloffzen

Trade-off between service and inventory costs
Rationalizing safety stock settings within NXP Semiconductors

Graduation Company: NXP Semiconductors SCM Competence Center High Tech Campus – 60 (5.50) Professor Holstlaan 4 P.O. Box 80073 5600 K.A. Eindhoven The Netherlands University Supervisors: Dr. Ir. Leo van der Wegen (UT) Prof. Dr. Ir. Ton de Kok (TU/e) (Dr. Ir. Matthieu van der Heijden (UT)) Company Supervisors: Ir. Sander Kok Ir. Ruud Driesen Ir. Erik van Wachem

University of Twente, Enschede Industrial Engineering and Management Science Specialization: Production and Logistic Management Mark W.H. Roeloffzen October 9th, 2007.

Summary

Summary ----------Context NXP operates in a highly dynamic and globalized semiconductor market. The NXP supply chain control is like it peers in semiconductor business quite complex. To manage the supply chain and to deal with the market characteristics, six so called Business Renewal II objectives were launched as part of the one page strategy. On one hand the BR II objectives target for a lower break-even point and on the other hand it aims for operational excellence. For supply chain management this translates in lower stock targets on one hand and better supply chain performance on the other hand. Because of the existing link between these two objectives, this research will support the inventory management project team within the Global Supply Chain Management Competence Center by providing insights in the dynamics between inventory levels and the perceived service levels. With these insights, reducing inventories in an uncontrolled way will be avoided and customer service will be increased. Problem formulation The current tools (supply chain configuration tool and zero based...

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