Tutorial

Teaching the Costs of Uncoordinated Supply Chains

by Charles L. Munson and Jianli Hu

The primary theme of supply chain management is that communication and coordination among members of a supply chain enhance its effectiveness, creating financial benefits to be shared by the members. In particular, the mere act of working together (global optimization) instead of separately (independent optimization) can “create money out of thin air,” resulting in a win-win scenario for all parties. In this tutorial, we present various numerical examples, tailored for classroom use either as a self-contained lecture or usable throughout a course, that clearly demonstrate the financial rewards obtainable from coordination. The examples cover areas such as (1) location decisions, (2) centralized warehousing, (3) lot sizing, (4) demand forecasting, (5) pricing, (6) newsvendor environments, and (7) aggregate planning. Sample notes and Excel spreadsheets will be provided to audience members.

Charles L. Munson is an Associate Professor and the Director of Graduate Programs in Business at Washington State University. He received his Ph.D., MSBA, and BSBA (summa cum laude) from Washington University in St. Louis. His primary research areas are supply chain management, quantity discounts, international operations management, and inventory theory. He has published in such journals as Production and Operations Management, IIE Transactions, Naval Research Logistics, Decision Sciences, Interfaces, Journal of the Operational Research Society, and Business Horizons. He has won both teaching and research awards at WSU, and he is currently a founding advisory board member of the WSU President’s Teaching Academy.

Jianli Hu is in her first year as an Assistant Professor at Chapman University. She received her Ph.D. and MA from Washington State University, and she earned her BS at the Beijing Institute of Clothing Technology. Her primary research interests involve inventory theory, supplier selection, and supply chain management in general. She has published in The Journal of the Operational Research Society and Interfaces. She won multiple teaching and research awards while a Ph.D. student at WSU, including the Harriett B. Rigas Award as the Outstanding Female Ph.D. Student at Washington State University in 2004.