Economics of managerial neglect in supply chain delivery performance

Alfred Guiffrida, Rakesh Nagi

Research output: Contribution to journalArticle

Abstract

This article addresses the economic impact of improving delivery performance in a two-stage supply chain when delivery performance is evaluated with respect to a delivery window. Building on contemporary management theories that advocate variance reduction as the critical step in improving the overall performance of a system, an expected cost model is developed that financially quantifies the benefit of reducing delivery variance. The present worth of the expected costs, due to untimely delivery, that accrue over a finite time horizon provide management with input for justifying financial investment to support a continuous improvement program to reduce delivery variance. The concept of managerial neglect is introduced and quantified as an opportunity cost of management neglecting to improve delivery performance in a timely manner.

Original languageEnglish (US)
Pages (from-to)1-17
Number of pages17
JournalEngineering Economist
Volume51
Issue number1
DOIs
StatePublished - Jan 1 2006
Externally publishedYes

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ASJC Scopus subject areas

  • Education
  • Engineering(all)
  • Economics and Econometrics

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