Abstract
We study a dual delivery risk problem that firms inside the free trade zones (FTZ) along the US-Mexico border (i.e., maquiladoras) often face in their daily operations. It is commonly observed that maquiladoras’ suppliers keep buffer inventories of components in a 3rd party logistics (3PL) warehouse on the US side of border. Maquiladoras will “call-off” the components when they are needed for production runs, often multiple times a day. Each call-off shipment is an international shipment that is involved with export/import procedures and is subject to customs inspection, which often causes delays. Such delivery uncertainty, combined with the 3PL replenishment uncertainty, makes just-in-time (JIT) operations a challenging task for maquiladoras. In this study, we examine how a firm’s logistical performance can be affected by multiple transportation risks and multi-locational buffer inventory strategies in a border-crossing JIT supply chain. Our results show that a firm’s service level is more affected by the border-crossing uncertainty, whereas a firm’s order lead-time performance is predominantly attributed to the 3PL replenishment risk.
Original language | English |
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Peer-reviewed scientific journal | Computers & Industrial Engineering |
Volume | 118 |
Issue number | April |
Pages (from-to) | 440-450 |
Number of pages | 11 |
ISSN | 0360-8352 |
DOIs | |
Publication status | Published - 11.03.2018 |
MoE publication type | A1 Journal article - refereed |
Keywords
- 512 Business and Management
- JIT systems
- Inventory management
- 3PL
- Delivery risk
- Border-crossing