The Impact of Lead Time Uncertainty on Supply Chain Performance Considering Carbon Cost

Abstract

In supply chain operation practices, lead time uncertainty is a common management issue. Uncertain lead time can lead to increased inventory costs and unstable service levels, which will directly affect the overall operation performance of the supply chain. While considering environmental performance in supply chain, it is important to understand how an uncertain lead time will affect sustainable performance. In this paper, we constructed a supply chain model with stochastic lead time and explored the relationship between uncertain lead time and supply chain performance. We considered carbon cost, inventory cost, and service level as a supply chain performance. System dynamics methodology was employed to observe and explore the dynamic change trend of the overall performance in the complicated supply chain model. This was done under both different levels of lead time standard deviation and different order policies. The results demonstrate how stochastic lead times can significantly increase inventory costs and carbon costs. Therefore, we propose appropriate ordering policies which mitigate the negative impacts of stochastic lead times.