tailieunhanh - Project Title: Simulation Model to Analyze the Impact of Outsourcing on the Performance of the Furniture Supply Chain

In section 2 we gave a review of the general outsourcing literature along with examples from the furniture industry. In this section we will provide a description of the simulation model that is developed to illustrate the supply chain structure of a typical furniture manufacturer in Mississippi. The simulation model allows managers of furniture companies to estimate the impact of various decisions related to outsourcing on the performance of the supply chain. The model is used to perform “what-if” analyses. For example, the decision makers are able to adjust parameters such as defect rate, lead time. | FINAL REPORT Project Title Simulation Model to Analyze the Impact of Outsourcing on the Performance of the Furniture Supply Chain Investigators Burak Eksioglu PI Sandra Eksioglu Mingzhou Jin Jilei Zhang Project Period 1 1 2007 - 1 31 2008 1 1. Introduction With more outsourcing to Asia the supply chain for US furniture companies are becoming longer. However US customers expect a high variety for their furniture as well as short delivery times. Due to these factors furniture companies that want to succeed in an industry witnessing dramatic changes need to have efficient logistics management to have a competitive advantage. To make their logistics network more efficient companies need to choose the right supply chain model promote cooperation with their partners in the supply chain and adopt new technologies for better decision making and management. . The Upholstered Furniture Industry in the United State Since late 1990 s the furniture industry in the US quickly shifted much of its production to Asia. Major furniture manufacturers either shut down their plants or reduced their production in the US. For example La-Z-Boy Inc. the second-largest furniture manufacturer in the US with billion in annual sales has shut down much of its US production and moved to China Chavez 2007 . Major US furniture companies now focus on brand management and logistics management. Furniture retailers are seeking direct outsourcing overseas. Furniture factories in Asia are also seeking direct US business. In other words the whole furniture supply chain in a global scope is experiencing a dramatic change. To survive and develop in this dynamic environment all players need to define develop and maintain their competitiveness via tuning their supply chain. In 2006 US consumers spent 83 920 million on residential furniture and bedding which represented a increase from 2005. Table 1 summarizes the shipments of wood and upholstered furniture in the US. 2005 Million 2006 Million .