Work load responsive adjustment of planned lead times

Mechanisms to adjust planned lead times based on current work loads are desirable for time‐phased planning systems. This paper investigates the use of exponentially smoothed order flow time feedback in setting planned lead times dynamically. The system studied is a supply chain with capacity‐constrained processing stations and transit times between stations. Lot sizes are based on the minimization of flow times using queuing approximations. Both seasonal and level demand patterns with uncertainty are considered. Since both dependent and independent demands are assumed at each station, customer delivery performance depends on the distribution of inventory along the supply chain. Results show that dynamic planned lead time setting can be used effectively to control delivery performance along the supply chain. Performance is also influenced significantly by appropriate lot size selection.