Inventory Routing - A Strategic Management Accounting Perspective

This dissertation develops a strategic management accounting perspective of inventory routing. The thesis studies the drivers of cost efficiency gains by identifying the role of the underlying cost structure, demand, information sharing, forecasting accuracy, service levels, vehicle fleet, planning horizon and other strategic factors as well as the interaction effects among these factors with respect to performance outcomes. The task is to enhance the knowledge of the strategic situations that favor the implementation of inventory routing systems, understanding cause-and-effect relationships, linkages and gaining a holistic view of the value proposition of inventory routing. The thesis applies an exploratory case study design, which is based on normative quantitative empirical research using optimization, simulation and factor analysis. Data and results are drawn from a real world application to cash supply chains. The first research paper shows that performance gains require a common cost component and cannot be explained by simple linear or affine cost structures. Inventory management and distribution decisions become separable in the absence of a set-dependent cost structure, and neither economies of scope nor coordination problems are present in this case. The second research paper analyzes whether information sharing improves the overall forecasting accuracy. Analysis suggests that the potential for information sharing is limited to coordination of replenishments and that central information do not yield more accurate forecasts based on joint forecasting. The third research paper develops a novel formulation of the stochastic inventory routing model that accounts for minimal service levels and forecasting accuracy. The developed model allows studying the interaction of minimal service levels and forecasting accuracy with the underlying cost structure in inventory routing. Interestingly, results show that the factors minimal service level and forecasting accuracy are not statistically significant, and subsequently not relevant for the strategic decision problem to introduce inventory routing, or in other words, to effectively internalize inventory management and distribution decisions at the supplier. Consequently the main contribution of this thesis is the result that cost benefits of inventory routing are derived from the joint decision model that accounts for the underlying set-dependent cost structure rather than the level of information sharing. This result suggests that the value of information sharing of demand and inventory data is likely to be overstated in prior literature. In other words, cost benefits of inventory routing are primarily determined by the cost structure (i.e. level of fixed costs and transportation costs) rather than the level of information sharing, joint forecasting, forecasting accuracy or service levels.

Kädestä suuhun : Makro- ja mikrotaloudellinen tarkastelu suomalaisten kotitalouksien säästämisestä ja sen mittaamisesta 1950-luvulla

This study is divided into two parts: a methodological part and a part which focuses on the saving of households. In the 1950 s both the concepts as well as the household surveys themselves went through a rapid change. The development of national accounts was motivated by the Keynesian theory and the 1940 s and 1950 s were an important time for the development of the national accounts. Before this, saving was understood as cash money or money deposited in bank accounts but the changes in this era led to the establishment of the modern saving concept. Separate from the development of national accounts, household surveys were established. Household surveys have been conducted in Finland from the beginning of the 20th century. At that time surveys were conducted in order to observe the working class living standard and as a result, these were based on the tradition of welfare studies. Also a motivation for undertaking the studies was to estimate weights for the consumer price index. A final reason underpinning the government s interest in observing this data regarded whether there were any reasons for the working class to become radicalised and therefore adopt revolutionary ideas. As the need for the economic analysis increased and the data requirements underlying the political decision making process also expanded, the two traditions and thus, the two data sources started to integrate. In the 1950s the household surveys were compiled distinctly from the national accounts and they were virtually unaffected by economic theory. The 1966 survey was the first study that was clearly motivated by national accounts and saving analysis. This study also covered the whole population rather than it being limited to just part of it. It is essential to note that the integration of these two traditions is still continuing. This recently took a big step forward as the Stiglitz, Sen and Fitoussi Committee Report was introduced and thus, the criticism of the current measure of welfare was taken seriously. The Stiglitz report emphasises that the focus in the measurement of welfare should be on the households and the macro as well as micro perspective should be included in the analysis. In this study the national accounts are applied to the household survey data from the years 1950-51, 1955-56 and 1959-60. The first two studies cover the working population of towns and market towns and the last survey covers the population of rural areas. The analysis is performed at three levels: macro economic level, meso level, i.e. at the level of different types of households, and micro level, i.e. at the level of individual households. As a result it analyses how the different households saved and consumed and how that changed during the 1950 s.