Mohammed M. El-Beheiry, Nahid H. Afia

Increasing supply chain flexibility is one of the tools which may be used to increase its agility or leanness. There are many dimensions of the supply chain flexibility, yet one of the most important flexibilities in supply chain context, is the logistics flexibility. Logistic flexibility can be expressed by many measures such as: lot size, lead times, and routing flexibilities among others. In this paper logistics flexibility expressed in lot size flexibility and its effect on the supply chain (SC) agility and leanness is studied. The measures of SC agility and leanness used are backordered quantities each period and the holding cost respectively. The SC structure consists of three levels with storage at the highest level only (the manufacturer). The demand at the lowest level (retailers) is assumed to be truncated Poisson distributed, which is identical at all retailers. The total supply chain cost includes holding, shortage, non-utilized machines (at the manufacturers only), and transportation costs. The total cost is modelled as stochastic mixed integer linear programming problem. Demand scenarios were assumed and the problem was solved optimally for each scenario, then the expected total cost and shipped quantities are calculated. The effect of changing the SC flexibility is also investigated. Results showed that although increasing SC flexibility increases the agility and leanness of the SC, yet increasing flexibility may increase the SC total cost.