Supply chains with service level agreements

Abstract

Supply chain has emerged as an important differentiator between successful and not so successful companies across the world. The importance of supply chain has resulted in service level agreements between the supplier and customer with various types of guarantees such as on-time delivery, equipment availability, etc., that usually include a penalty if the agreed service level is not met. Dell, Fedex, and Mumbai Dabbawallas are a few examples, where success is mainly attributed to supply chain strategies. The main focus of this chapter is to study supply chain contracts with delivery guarantees and other service level agreements and how such supply chains can be managed effectively. We will look at an array of mathematical techniques, which can be used to model supply chains with service level agreements across industries.