Tagungsband zum Doctoral Consortium der WI 2009

assessing the effects of assortment related decisions on the underlying production and distribution
network is still an open question (cf. [5, p. 49]). As the assortment of a company evolves
continuously by introducing new or discontinuing existing products, the most important question is
what effects on the configuration of the production and distribution network and related costs can
be expected if the assortment is changed in a particular way?.
Current approaches cannot answer this question satisfactorily, mainly because they neglect the nonlinear
interrelations between complexity and related costs. Methods from costing, especially
activity based costing, seek to assign costs to single product variants fairly according to the input
involved. This approach is not suitable for the aspired what-if analysis, even if the cost assignment
was perfectly fair, because of interdependencies between the single product variants that cannot be
mapped into a single cost value per product. For example, if a certain degree of standardisation of
packaging options across several countries is reached, it becomes favourable to keep inventories at
a central warehouse instead of local stocks. Therefore, statements about potential savings derived
from assortment reduction can only be made for complete assortment change scenarios rather than
on a per product basis. In order to assess these effects monetarily, the question what changes in the
configuration of the production and distribution network can be expected in response to the
assortment changes? must be answered first. Only on the basis of a production and distribution
network adapted to the new assortment, statements about cost effects of these changes can be made.
This leads to the requirement for methods to adapt the planning and control parameters to the new
situation in order to assess the optimisation potential offered by assortment changes.
1.2. Aim of the dissertation
This work seeks to evaluate the most relevant assortment dependent cost positions, focusing on the
areas of inventory management and production execution. This is due to the fact that cost effects
are particularly expected as a result of changing safety stock requirements and related inventory
holding costs as well as setup and scrap cost in the production area.
Aim
Cost
components
Parameters of
cost function
Setup and scrap cost at
production process steps
Planned
production quantity
per period
Planning buffer
Average setup cost
per product and
production order
Scrap cost per
product and
production order
WI Doctoral Consortium 2009 25
Assess cost incurred in a production and distribution
network by a certain assortment
Safety stock cost Cycle stock cost
Stockpoints
Safety stock level
per period
Inventory holding
and warehousing
cost rates
2
Planned
production quantity
per period
Demand rates per
period
Inventory holding
and warehousing
cost rates
Given parameters
Parameters to be
determined for a
given assortment
Figure 1: Cost components and required parameters for their assessment