Lead-time disturbance and uncertainty on production and inventory control: a review

The main goal of supply chain managers is to match customer demand with supply effectively, in order to minimise stockout rate as well as to reduce operating costs. Uncertainties and disturbances in the lead-time can lead to supply chain inefficiencies and risks. Notwithstanding the relevance of lead-time changes, previous research has focused on understanding the impact of demand uncertainty and on improving demand forecasting methods. In this paper, we review the body of knowledge in relation to the impact of lead-time disturbance and uncertainty on the planning and control of production and inventory systems. Articles are classified according to the applied methodology, performance criteria, type of mathematical model (linear/nonlinear, discrete/continuous, deterministic/stochastic) and venues for future research are outlined. We found a number of articles using analytical modelling techniques to investigate the impact of stochastic lead-time on supply chain performance. However, there is lack of understanding on the impact of deterministic disturbances triggered, for instance, by known sudden changes in lead-time. The literature recognises the importance of estimating lead-time with accuracy since a mismatch between actual and estimated lead-times may lead to an inventory drift, but it fails to capture the underlying mechanisms of lead-time disturbances, which are fundamental for an effective system design.