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T
t=1
d
t
T
(1)
and
S
2
D
=
T
t=1
(d
t
"
d)
2
T 1
(2)
where d
t
is the demand during period t, and T is the number of periods
considered.
Table V.
Supply chain system
characteristics and
associated flexibility
types
Flexibility type Supply chain system characteristics
Volume flexibility Variable demand
Delivery flexibility Delivery dates change regularly and costs are associated
with not meeting new delivery dates
Mix flexibility Stationary demand for multiple product types
New product flexibility Products with short life cycles
Measuring
supply chain
performance
287
Then we can define volume flexibility (F
v
) as:
F
v
= P
_
O
min
"
D
S
D
_ D _
O
mx
"
D
S
D
_
(3)
or
F
v
=
_
O
mx
"
D
S
D
_
_
O
min
"
D
S
D
_
(4)
where F
v
[0Y 1), and F
v
represents the long-run proportion of demand that
can be met by the supply chain system. This relation is illustrated below in
Figure 3, in which the demand is standardized and represented as a standard
normal curve, with mean "
D
and standard deviation '
D
.
Example. Suppose a particular supply chain has 32 weeks of weekly demand
volume data available. These data are given belowin Table VI.
Then, for this system,
"
D =
T
t=1
d
t
T
24X69 (5)
2
( (
Figure 3.
Standardized normal
demand distribution
Table VI.
Weekly demand
volume (example)
Period
(t)
Demand
volume
(units)
Period
(t)
Demand
volume
(units)
Period
(t)
Demand
volume
(units)
Period
(t)
Demand
volume
(units)
1 16 9 12 17 38 25 24
2 21 10 43 18 19 26 17
3 32 11 8 19 29 27 36
4 5 12 29 20 12 28 11
5 18 13 33 21 34 29 28
6 26 14 39 22 49 30 23
7 40 15 7 23 16 31 32
8 31 16 15 24 30 32 17
IJOPM
19,3
288
and
S
D
=
S
2
D
_
=
T
t=1
(d
t
"
d)
2
T 1
_
11X35 (6)
If the supply chain has a maximum profitable output volume of 50 units per
time period, and a minimum profitable output volume of five units per time
period, then the volume flexibility is given by:
F
v
=
_
50 24X69
11X35
_
_
5 24X69
11X35
_
= (2X23) (1X73) = 0X9453X (7)
5.2 Delivery flexibility (F
D
)
The ability to move planned delivery dates forward may be important in
supply chain management. This ability allows the supply chain to
accommodate rush orders and special orders, and will be described as delivery
flexibility. Delivery flexibility will be expressed as the percentage of slack time
by which the delivery time can be reduced. More specifically, define t
+
as the
current time period, L
j
as the due date period (or the latest time period during
which the delivery can be made) for job j, and E
j
as the earliest time period
during which the delivery can be made for job j. If there are j = 1, . . ., J jobs in
the system, then the total slack time for all jobs j is given by the quantity
J
j=1
(L
j
t
+
)Y
and the minimumdelivery time for all jobs j is given by
J
j=1
(E
j
t
+
)X
Thus F
D
, the instantaneous delivery flexibility, may be measured as the
proportion of excess slack across all jobs j, which can be formally defined as:
F
D
=
J
j=1
((L
j
t
+
)) (E
j
t
+
))
J
j=1
(L
j
t
+
)
(8)
which simplifies to
F
D
=
J
j=1
(L
j
E
j
)
J
j=1
(L
j
t
+
)
(9)
Measuring
supply chain
performance
289
5.3 Mix flexibility (F
m
)
Mix flexibility, F
m
, is similar to, and often used interchangeably with process
and job flexibility. Generally, mix flexibility measures either the range of
different product types that may be produced during a particular time period,
or the response time between product mix changes. More specifically, Slack
(1991) discusses measuring mix flexibility as:
.
the number of different products that can be produced within a given
time period (product mix flexibility range); or
.
the time required to produce a new product mix (product mix flexibility
response). Formally, the product mix flexibility range is given by:
F
m
= N(t) (10)
where N(t) is the number of different product types that can be produced
within the time period t, with t > 0 and N(t) I