Optimal order fulfillment policies for a ceramic tile manufacturer

Ceramic tiles manufacturing is characterized by a wide range of shade and caliber of the items produced even within the same lot. International standards provide acceptable differences in shade intensity and caliber for the products shipped to a specific customer. Thus, the several "sub-SKUs" produced in the same lot should be handled independently as alternative/substitute SKUs. In this environment, customers often come back requiring additional quantities of the same "sub-SKU", as in their initial order. In this paper, we evaluate how alternative customer-order fulfillment policies affect customer service and the related reserved warehouse space of the manufacturer. Two policies are evaluated employing Monte Carlo simulation. The developed simulation models fed with real-world data were used to conduct various factor and "what-if" analyses leading to interesting managerial insights.

Optimal order fulfillment policies for a ceramic tile manufacturer Conference Paper