CHAPTER 93. Suds’s Bottling Company does bottling, labeling, a.docx

CHAPTER 9
3. Suds’s Bottling Company does bottling, labeling, and
distribution work for several local microbreweries. The demand
rate for Wortman’s beer is 600 cases (24 bottles each) per week.
Suds’s bottling production rate is 2,400 cases per week, and the
setup cost is $800. The value of inventory is $12.50 per case,
and the annual holding cost is 30 percent of the inventory value.
Suds’s facilities operate 52 weeks each year. What is the
economic production lot size?
CHAPTER 12
2. Cyberphone, a manufacturer of cell phone accessories, ended
the current year with annual sales (at cost) of $48 million.
During the year, the inventory of accessories turned over six
times. For the next year, Cyberphone plans to increase annual
sales (at cost) by 25 percent.
a. What is the increase in the average aggregate inventory
value required if Cyberphone maintains the same inventory
turnover during the next year?
b. What change in inventory turns must Cyberphone achieve
if, through better supply chain management, it wants to support
next year’s sales with no increase in the average aggregate
inventory value?
This course has helped me to gain invaluable insights about the
advanced practice nursing roles. I have also been able to master
most of the predesignated course outcomes, although I must
admit that I require further development in some areas. An
important area in which I have been able to learn a lot pertains
to the different roles and scope of practice for nurses working in
advanced arenas. These arenas include clinical, education,

administration, informatics, research, and health policy arenas
(Hamric, Hanson, Tracy, & O'Grady, 2014). While I was able to
learn that these professionals might have different
responsibilities and roles, I also grasped the nature of
interdependence between the various professionals and the
importance of multidisciplinary collaboration for advancing the
profession and ensuring the dispensation of quality care to
patients.
From the class lectures and assignments, I also gained a
heightened understanding of the core competencies that apply to
advanced practice nurses. These competencies can play a central
role in improving the quality of care dispensed to patient and
fostering the professional development of the advanced practice
nurses. Some of the competencies that cut across all APN roles
include effective communication, responsive leadership,
coaching and mentorship, consultation, teamwork, people
development, as well as respect for diversity (Goodman, Reidy,
& Cartier, 2012). Among these competencies, the one that
would benefit me from further improvement is diversity
awareness. To improve my skills in this competency domain, I
aspire to find mentorship from my superiors, enrolling in
multicultural courses in addition to providing care to diverse
patients where I can get firsthand account about dealing with
multicultural issues in health care.
As I have further learned in this course, health promotion and
disease prevention are critical aspects in the work of advanced
practice nurses. Apart from improving the health of
communities, health promotion and disease prevention are also
instrumental for curtailing the escalating health care costs in the
nation and enhancing the quality of life particularly for
vulnerable populations such as the elderly, women, veterans,
and racial/ethnic minorities (Swan, Ferguson, Chang, Larson, &
Smaldone, 2015). I plan to take a proactive stance in fighting
for the rights of these vulnerable populations to access quality
care and minimize the disparities experienced by these
populations. Specific strategies that I aspire to utilize to fight

for these vulnerable and marginalized groups include engaging
in advocacy efforts and liaising with other stakeholders such as
faith-based communities to call for responsive reforms geared
towards elimination of the disparities.
Overall, it is my conviction that the course has offered a solid
foundation to guide my clinical practice in the future. I will
continue integrating lessons learned about the importance of
informatics to provide coordinated and safe care to clients.
When I began the course the Role of the Advanced Practice
Nurse, I was unsure of the information that the course would
entail. I was delighted to find that the teachings were the basics
I would need to understand my role as a Family Nurse
Practitioner (FNP). I was very naive to think I was
knowledgeable about what my role in practice would be, when I
was not. Over the last five weeks I was introduced to the
history of Nurse Practitioners (NP), the roles and scope or
practice for advanced practice nurses working in clinical and
non-clinical settings, understanding of collaboration and
communication, assess my personal philosophy that will carry
into advanced practice, attributes of the FNP practice arena, and
to identify when collaboration, communication, and leadership
skills will be used in advanced practice. The competencies that
I have achieved while participating in this course are listed
below.
1. Explore the historical evolution of the advanced practice
nurse.
Although the history of NP’s dates to 1860 for the Nurse
Anesthetist, I was surprised to learn that NP’s did not start
having formal education and specialty training requirements
until years later. As a child I was very lucky to have had great
health care, however I had never received care or had exposure
to an NP until 1993 when I was in the Navy. At that time the
NP I was exposed to was practicing primary care. Prior to that,

I had no inclination that NP’s even existed.
2. Differentiate the roles and scope of practice for
nurses working in advanced clinical,
education, administration, informatics, research, and health
policy arenas. As I have learned from the teachings of this
course there is a difference between Advanced Practice Nursing
(APN) and Advanced Nursing Practice (ANP). APN is a
clinical role that has direct contact with patients. The APN is a
nurse who holds a master’s degree and has “expertise in areas
such as diagnosis and assessment, planning and implementation,
and evaluation of healthcare and record-keeping” (Nurse
Journal, n.d., para. 4). Advanced Practice Nursing refers to
both clinical and non-clinical providers such as Nurse
Practitioners, Nurse Educators, Nursing Administration,
Nursing Informaticists, and Nursing Researchers.
3. Analyze attributes of the practice arena such as access
and availability, degree of
consumer choice, competition, and financing that impact
advanced practice nurses and their ability to effectively
collaborate with other health professionals.
The FNP in practice provides comparable, quality, and
accessible health care at a reduced cost to that of a
physician (Stanik-Hutt et al., 2013). NP’s are paid at about 80-
85% of the cost of a physician (American Association of Nurse
Practitioners, 2013). FNP’s that practice in states that have
limited practice laws FNP’s must collaborate with physicians
regarding patient care, medication prescribing, chart reviews,
and ordering of medical devices or therapy etc. FNP’s must
also collaborate with physician and colleagues when patients
have health care needs that the FNP is lacking experience in.
“An effective health system integrates the diverse knowledge
and skills of multiple types of providers who communicate and
collaborate with patients and each other and are accountable to
deliver care to the patient and society” (Stanik-Hutt et al., 2013,
p. 498).
4. Integrate evidence from research and theory into

discussion of practice competencies,
health promotion, and disease prevention strategies, quality
improvement, and safety standards.
Based on Hamric’s model the six core competencies are
“Collaboration, Leadership, Evidence-based practice,
Consultation, Guidance and coaching, and Ethical decision-
making skills” (Hamric et al., 2014, p.44). These are guidelines
used in daily practice to provide comprehensive care to a
patient. FNP’s practice as holistic providers diagnosing health
conditions, while promoting health and disease prevention and
providing education to patients and families.
5. Identify collaborative, organizational, communication
and leadership skills in working
with other professionals in healthcare facilities and/or academic
institutions.
The understanding I have of this concept is a team working
together, who trust each other and share information to achieve
a common goal. When a member of the group exhibits
leadership skills they essentially become a role model for the
entire team. When making decisions that will affect the team
the leader would ask for input from each team member to come
to a consensus.
6. Synthesize knowledge from values theory, ethics, and
legal/regulatory statutes in the
development of a personal philosophy for a career as an
advanced practice nurse.
My personal philosophy as an FNP will be to provide quality,
effective, and compassionate care to every individual patient.
To be and advocate for my patients, their families and their
health and wellness. Also, to collaborate with the entire health
care team to provide the best care possible.

Research Article
Sustainable Supply Chain Design: A Configurational Approach
S. Maryam Masoumik, Salwa Hanim Abdul-Rashid,
Ezutah Udoncy Olugu, and Raja Ariffin Raja Ghazilla
Department of Mechanical Engineering, Centre for Product
Design and Manufacturing (CPDM), Faculty of Engineering,
University of Malaya, 50603 Kuala Lumpur, Wilayah
Persekutuan, Malaysia
Correspondence should be addressed to Salwa Hanim Abdul-
Rashid; salwa [email protected]
Received 16 October 2013; Accepted 24 November 2013;
Published 12 January 2014
Academic Editors: Z. Ayag, W.-C. Hong, and W.-C. Lee
Copyright © 2014 S. Maryam Masoumik et al. This is an open
access article distributed under the Creative Commons
Attribution
License, which permits unrestricted use, distribution, and
reproduction in any medium, provided the original work is
properly
cited.
Designing the right supply chain that meets the requirements of
sustainable development is a significant challenge. Although
there
are a considerable number of studies on issues relating to
sustainable supply chain design (SSCD) in terms of designing
the practices,
processes, and structures, they have rarely demonstrated how
these components can be aligned to form an effective
sustainable
supply chain (SSC). Considering this gap in the literature, this

study adopts the configurational approach to develop a
conceptual
framework that could configure the components of a SSC. In
this respect, a process-oriented approach is utilized to classify
and
harmonize the design components. A natural-resource-based
view (NRBV) is adopted to determine the central theme to align
the design components around. The proposed framework
presents three types of SSC, namely, efficient SSC, innovative
SSC, and
reputed SSC. The study culminates with recommendations
concerning the direction for future research.
1. Introduction
In recent years, increased pressure from various stakeholders,
such as customers, suppliers, regulators, competitors, local
and global communities, and nongovernmental organiza-
tions (NGOs), have prompted the manufacturing industry
to integrate sustainability-conscious practices into their busi-
ness not only at the firm level, but also for the entire supply
chain [1, 2]. This shift from local optimization at the firm level
towards the entire supply chain, involving the management of
product flows from the initial sources of raw material to the
end-user customers in both forward and reverse directions,
requires a broader development of sustainability [3].
A number of studies have been conducted to investigate
sustainable supply chain (SSC) practices, their drivers, and
their impact on organizational performance and competitive-
ness. There are also studies dedicated to optimizing planning
processes and designing the networks for green, reverse, and
closed loop supply chains. Table 1 shows a comprehensive
list of these types of study. However, with the exception of a
few research works (e.g., [4–6]), studies addressing the issues
relating to alignment between SSC practices, processes, and

structures are rarely found in the literature.
The concept of alignment between the design com-
ponents, also called the configurational approach [7, 8],
originated from the literature on organizational design and
strategic management. The configurational approach in orga-
nizational design focuses on the alignment between different
components of design, such as strategy, process, and struc-
ture. Meyer et al. [8] used the term organizational config-
uration for multidimensional constellations of conceptually
distinct characteristics that commonly occur together. Miller
[7] described configuration as a tool for creating internal
harmony between the elements of an organization, which
include strategy, structure, and context. He also mentioned
that a central theme is needed to create such harmony.
This approach was also discussed in the literature for
designing a traditional supply chain (TSC). As a case in point,
Vonderembse et al. [9] described different aspects of design
including organizational structure, approach to choosing
suppliers, demand patterns, inventory strategy, lead time
focus, manufacturing focus, product design strategy, and
human resources. They suggested an optimum configuration
for the supply chain with respect to the product type and life
cycle, namely, lean, agile, and leagile. Chandra and Grabis
[10] also discussed the supply chain as a configurable system
Hindawi Publishing Corporation
Volume 2014, Article ID 897121, 16 pages
http://dx.doi.org/10.1155/2014/897121
2 The Scientific World Journal

Table 1: The list of previous studies in sustainable supply chain
practices, processes, and structures.
Area References
Sustainable supply chain practices, drivers, and performances
[39, 44, 58, 59, 61–72]
Optimizing planning processes [73–86]
Network design [34, 36, 87–102]
that needs to be adapted with changes in products, pro-
cesses, resources, suppliers, demand patterns, lead times, and
commitment of the supply chain’s echelons. More recently,
Stavrulaki and Davis [11] discussed how products should be
aligned with supply chain processes and strategies to increase
competitive advantage. The origin of this approach can be
found in the work of Fisher [12], which presented the idea of
designing the right supply chain by considering the product
type.
Despite the importance of alignment in achieving sus-
tainable performance [13], which has been considered in
the traditional supply chain and the strategic management
literature, this particular area of research has received little
attention in SSC studies. Thus, the aim of this paper is
to develop a conceptual framework in which designing an
aligned SSC can be achieved. The authors will initially present
a better understanding of different components of sustainable
supply chain design (SSCD) including SSC practices, struc-
tures and processes, and their characteristics. Subsequently,
a conceptual framework for configuring these components
will be developed. This framework will assist supply chain
designers to design an aligned SSC and to provide a new
viewpoint for academics to develop this research field further.
To develop the conceptual framework, a process-oriented
approach is utilized to provide a comprehensive view for

identifying and harmonizing the categorization of SSC prac-
tices, processes, and structures. A natural-resource-based
view (NRBV) [14, 15] is also used to determine the central
theme for these components to align around. According to
the NRBV, the central theme can be “cost and risk reduction”,
“innovation and repositioning”, or “reputation and legiti-
macy”. These are the values created through implementing the
various environmental strategies.
The remainder of this paper is divided as follows: firstly, a
brief definition of a SSC, a key term in this study, is provided
in Section 2. This is followed by a description of the research
process in Section 3. A review of the literature on SSC
practices, processes, and structures is discussed in Section 4.
The categorized lists of different practices, processes, and
structures are also derived in this section by applying a
process-oriented approach. In Section 5, a conceptual frame-
work for configuring these components around a central
theme is developed by using a configurational approach.
Finally, Section 6 concludes the paper by highlighting the
significant findings and recommends the direction for future
development of this research.
2. The Concept of SSC
This section attempts to provide a comprehensive under-
standing concerning the concept of a sustainable supply chain
(SSC) by considering the related definitions presented in the
literature. A SSC consists of two key terms, namelym, “supply
chain” and “sustainability”. According to Mentzer et al. [16,
pp. 4], a supply chain can be defined as follows: “a set of three
or more entities (organizations or individuals) directly involved
in the upstream and downstream flows of products, services,
finances, and/or information from a source to a customer.” This
definition of a supply chain refers to the forward supply chain.

For the second key term—sustainability—the definition
provided by Carter and Rogers [17, pp. 364] for “organiza-
tional sustainability” states that “organizational sustainability
consists of three components: the natural environment, society,
and economic performance and at the intersection of these
triple bottom of line, there are activities that organizations
can engage in which not only positively affect the natural
environment and society, but which also result in long-term
economic benefits and competitive advantage for the firm.”
In the initial period in which the concept of sustainable
development was first introduced [18], most studies were ded-
icated to integrating environmentally friendly issues into the
supply chain management. Thus, terms such as green supply
chain (GSC) [19], reverse logistics (RL) [20], and closed-
loop supply chain [21] were in common use. Considering the
definitions of these terms would help to better understand
the concept of a SSC. The following paragraphs present the
definitions for these three main key terms.
Adding the term “green” to supply chain management
seeks to incorporate environmentally conscious thinking in
all processes in the supply chain including green purchasing,
green manufacturing, green material management, green
distribution, green marketing, and reverse logistics. It also
considers waste reduction in all stages of the supply chain
and involves cradle-to-grave product management in supply
chain management [22–24]. Product recovery and end-of-life
product management have been highlighted in the literature
of reverse supply chains and closed loop supply chains. A
reverse supply chain involves backward flows of product
returns from customer to source [25]. These product returns
can be recovered and re-entered in the forward supply chain.
The term closed loop supply chain is applied to a chain that
consists of both reverse and forward supply chains [17, 26].

Based on the literature review conducted for this research,
the term sustainability entered the supply chain literature
after 2001. To date, apart from a few exceptions, the contents
of publications are still limited to environmentally conscious
issues. However, some authors (e.g., [17, 27, 28]) have tried
to define the term sustainable supply chain management
(SSCM). They have integrated the definition of supply chain
management with the triple bottom line of sustainability
that consists of environmental, social, and economic per-
formance. For example, Seuring and Müller [28, pp. 1700]
The Scientific World Journal 3
defined SSCM as “the management of material, information
and capital flows as well as cooperation among companies along
the supply chain while taking goals from all three dimensions
of sustainable development, that is, economic, environmental
and social, into account which are derived from customer and
stakeholder requirements.”
Taking into account the above-mentioned definition of a
SSC and by integrating the concept of the closed loop supply
chain, green supply chain, and organizational sustainability, a
SSC can be summarized as “a supply chain that closes the loop
of upstream and downstream flows of products and materials
by recycling and recovering used-items and re-entering them
in production cycles and engages in sustainability-conscious
practices taking goals from all three dimensions—economic,
environmental and social—of sustainable development into
account, which are derived from the customer and stakeholder
requirements.” As a result, SSC practices not only positively
affect the natural environment and society, but also result in
long-term economic benefits and competitive advantage for

the entire chain.
3. Research Process
The research process of this study is divided into three stages.
The first stage is to understand the components of SSCD.
Secondly, the SSC practices, processes, and structures are cat-
egorized accordingly. Finally, the framework for configuring
a SSC is developed. These research stages are presented in the
subsequent subsections.
3.1. Understanding the Components of SSCD. A comprehen-
sive literature review was conducted on the credible literature
published within the last 18 years to identify and understand
the components of SSCD in terms of practices, processes,
and structures. A combination of keywords, such as sup-
ply chain/logistics, sustainable, green, environment, reverse,
closed-loop, waste, return, reuse, recycle, remanufacture, and
product recovery, were used in the literature search. These
keywords were shortlisted based on those used by authors of
highly cited research papers.
The list of keywords was used to search for articles from
1995 to 2012 on the Web of Science database to cover a
significant proportion of the credible and reliable literature.
The initial search resulted in 3,274 research articles and 109
review papers. The search results were refined by keeping
engineering, management, business, and environmental sci-
ence categories and excluding other categories.
The list was then reduced to 341 papers after analysis of
the titles and abstracts and selection of only the highly related
articles. Each paper was then assigned to one or multiple
components of SSCD based on the content of the article.
Several papers were also added based on bibliographical
analysis and some were rejected due to irrelevancy. The final

list, based on both journal papers and bibliographic search,
was refined to 309 articles to which this study will make
reference. Table 2 shows the distribution of articles referred
to in this study from various journals within the last 18 years
(1995–2012).
3.2. Categorizing SSC Practices, Processes, and Structures.
This study, by reviewing the literature, has attempted to
explore the different processes required to manage a SSC.
The Supply Chain Operation Reference or SCOR model [29]
was used as a master guide to categorize and define these
processes. SCOR is a well-known model in the literature
pertaining to supply chains developed by the Supply Chain
Council.
SSC structures in terms of forward and reverse networks
should be designed to implement SSC processes. This study,
by reviewing the literature, presents a classification of the
various types of network.
A combination of IDEF0 (a function modelling method)
and IDEF3 (a process modelling method) [30–33] was used to
classify the SSC practices found in the literature. The process-
oriented approach involved in these methods provides the
basis for harmonizing the SSC practices with the SSC pro-
cesses and structures.
3.3. Developing the Framework for Configuring a SSC. In
the final stage, a conceptual framework is developed for
configuring the SSC practices, processes, and structures. In
accordance with the configurational approach used in this
stage, a central theme is required to harmonize the various
components of a SSC. The concept presented in NRBV [14, 15]
is adapted to determine this central theme. According to
NRBV, implementing different environmental strategies can
generate different kinds of value for stakeholders. These val-

ues are cost and risk reduction, reputation and legitimacy, and
innovation and repositioning. These three categorizations of
values can be considered as central themes forming three
types of configuration for SSCs.
4. SSC Processes, Structures, and Practices
4.1. SSC Processes. The Supply Chain Operation Reference
model (SCOR) [29] was used as a master guide to determine
the main subprocesses in SSC. SCOR is a well-known model
in the literature of supply chains developed by the Supply
Chain Council. The main processes in this model are plan,
source, make, deliver, and return.
From the definitions of the “plan” process in the SCOR
model, four main subprocesses are derived from the SSC
literature, namely, inventory control and management, pro-
duction and capacity management, green supplier manage-
ment, and green marketing. In respect of the importance
of the “return” process in SSC, the process is extended to
three sub-processes, namely, collect, recover, and dispose.
Figure 1 illustrates the main processes of a SSC. Table 2
also depicts the definitions offered by the authors for these
processes. The definitions provided by the Supply Chain
Council [29] are considered in the authors’ definitions and are
customized based on the SSC literature. To better understand
the definitions, the related literature on each process is also
presented in Table 3.
4.2. SSC Structures. Different organizations or individuals are
required to play a role in a supply chain in order to implement

Table 2: The distribution of articles in various journals over the
last 18 years.
Journal Numbers of articles
International Journal of Production Research 17
Journal of Cleaner Production 13
European Journal of Operational Research 10
International Journal of Production Economics 7
Computers and Operations Research 6
Supply Chain Management-an international journal 6
Resources Conservation and Recycling 5
Computers and Industrial Engineering 4
Journal of Operations Management 4
Harvard Business Review 3
International Journal of Environmental Science and Technology
3
International Journal of Operations and Production Management
3
California Management Review 2
International Journal of Advanced Manufacturing Technology 2
International Journal of Physical Distribution and Logistics
Management 2
Journal of Business Logistics 2
Journal of Environmental Management 2
Omega-International Journal of Management Science 2
Production and operations management 2
Production planning and control 2
Transportation Research Part E-Logistics and Transportation
Review 2
Academy of Management Journal 1
Academy of management review 1
Benchmarking: an international journal 1
Business Strategy and the Environment 1
Computers in Industry 1
Environmental Health Perspectives 1
Industrial Management and Data Systems 1

Interfaces 1
International Journal of Logistics Management 1
International Journal of Management Reviews 1
Journal of Management Studies 1
Journal of Mechanical Design 1
Journal of the Operational Research Society 1
Logistics Information Management 1
M and Som-Manufacturing and Service Operations Management
1
Management Science 1
Mathematical and Computer Modelling 1
Strategic Management Journal 1
Technovation 1
The Academy of Management Executive (1993–2005) 1
The International Journal of Logistics Management 1
Total 118
the SSC processes. From the literature [34–37], there are five
types of network through which the processes of forward and
reverse supply chains are accomplished:
(i) forward supply chain networks, which include suppli-
ers, producers, and distributors that are designed for
producing original products and distributing them to
the market;
(ii) collection networks (CO), which are designed for
collecting used products from consumers and dis-
tributing them to relevant destination points based on
feasible recovery options;

Table 3: Sustainable supply chain processes and their
definitions.
SSC Process Definition Related literature
Plan
Inventory control and management
Processes that manage inventory regarding the high variability
and
uncertainty in time, quality and quantity of returns, and demand
for recovered materials.
[103–110]
Production and capacity management
Processes that plan production and manage the capacities of
manufacturers and recovery centres to achieve a balance
between
demand and returns considering the high degree of uncertainty
and complexity in recovery management systems.
[75, 81, 84, 103]
Green supplier management
Processes that select and evaluate suppliers considering
environmental issues; cooperate with them to enhance
environmental performance and promote the initiatives and
practices for greening the suppliers.
[45, 46, 108, 111–113]
Green marketing
Processes that promote a green image and persuade customers
that
the green and environmentally friendly products meet their
requirements.

[114, 115]
Source
Processes that procure materials and components that have a
lower
impact on the environment and also consider recovered products
as a valuable source of materials and components.
[40, 116]
Make Processes that produce products that have a lower impact
on the
environment.
[117, 118]
Deliver
Processes that provide both original and recovered products to
meet the uncertain demand, including order management,
environmentally friendly packaging, and sustainable
transportation systems.
[119, 120]
Return
Collect
Processes that involve the collection operations of returned
products, inspection, and separation of recoverable products
from
disposal and delivering the recoverable products to related
places.
[34, 117]

Recover
Processes that transform returned and used products to reusable
products, typically including repairing, refurbishing,
remanufacturing, cannibalizing, and recycling.
[34, 119]
Dispose Processes that include land filling or incinerating
products that are
rejected at the “Collect” process.
[40, 117]
Plan
Source Make Deliver
Plan
Disposal Recover Collect
Forward supply chain
Reverse supply chain
Figure 1: Sustainable supply chain processes: main
categorization
(adapted from SCOR model [29]).
(iii) reprocessing networks (REP) that transform used
products to reusable products through repairing,
refurbishing, remanufacturing or cannibalizing, and
distributing them to the reuse market;
(iv) recycling networks (REC), which extract reusable

materials from used products and distribute them to
suppliers;
(v) waste treatment networks (WT) that direct unusable
products and materials to disposal or landfill sites.
As can be seen from Figure 2, in the forward supply
chain, raw materials are taken from suppliers and pass
through the “make” process undertaken by a manufacturer
who is the producer. The final products produced in the
forward supply chain are delivered to customers and end-
users by a distributor. Later on, through the reverse chain,
used products are collected by a collector and separated into
recoverable or unusable units. Unusable products are carried
to disposal sites and recoverable products are transferred
either to a recycler or to a reprocessor, according to the
processes required for their recovery. Recycled materials
would be re-entered into the forward chain or sold to the
Supplier Producer Distributor
Reprocessor
Collector
Recycler
Disposal site
Origin product
market
Product reuse

market
Material reuse
market
Figure 2: A typical structure for sustainable supply chain
(adapted
from Fleischmann et al. [34], Mutha and Pokharel [36], Olugu
et al.
[37], and Sheu et al. [35]).
Process
Control
OutputInput
Mechanism/resource
XOR
This notation shows that only and just only
one of the following processes could be started
Figure 3: IDEF0 and IDEF3 notations [31] used in this paper.
market. Reprocessed products can also be sold in the used-
products market. The waste produced in the “make” process
is also transferred to a collector in the reverse supply chain,
where they would be transferred to a disposal site or passed
to a re-processor or recycler according to the content of the
produced waste.
4.3. SSC Practices. Different practices in managing envi-
ronmentally conscious supply chains are identified from
the collected literature. These practices are classified under

nine headings using IDEF0 and IDEF3 [30–33], which are
the function and process modelling methods, respectively.
Figure 3 illustrates the notations of these methods, as used
in this paper.
Figure 4 shows the process model of a typical green
supply chain, which classifies green supply chain practices
into nine groups. The practices labelled from group B to H are
related to the green supply chain processes. Group A practices
refer to the mechanism used to implement these processes
while Group I practices relate to managing the standards and
regulations imposed by stakeholders to control the processes.
Table 4 presents the sample practices for each group as found
in the literature.
4.3.1. Group A: Internal Environmental Management. To
implement green supply chain practices, the organizations
are required to establish their own environmental man-
agement system. These systems provide the mechanism for
implementing green supply chain practices and will have a
remarkable impact on the firm’s environmental performance
[38]. Management commitment and support for green supply
chain initiatives are also key measures for success in greening
the supply chains [39].
4.3.2. Group B: Green Supply and Supplier Management.
Practices that relate to the supply of raw materials and
components are categorized in this group. There are two main
themes for green supply.
The first theme is to utilize the used products and recycled
materials as a valuable source of components and materials
[40–42]. Proactive companies would try to increase the cost
of OEM returns’ acquisition for their competitors and create
a competitive advantage for themselves [43]. However, the
implementation of these practices requires new technologies

to recover and reuse the materials [22].
The second theme is to establish a green purchasing
procedure by making relevant changes in raw materials
and utilization of environmentally friendly materials [44],
green supplier selection and green supplier relationship man-
agement [41, 44–47], integrating purchasing strategies with
product recovery strategies [48] and involving components
suppliers in product design [40].
The first theme of utilizing used products is known as
the waste-directed approach, whereas the second theme of
making changes in raw materials and use of environmentally
friendly materials is known as the source-directed approach
[22]. In order to adopt these approaches, companies are
required to collaborate with their suppliers concerning the
environmental aspects [49–51].
4.3.3. Group C: Green Manufacturing. The majority of prac-
tices in this group involve the waste-directed approach
[22]. The main purpose of these practices is to increase
product recovery feasibility and the values created by product
recovery management. Some examples of these practices are
product eco-design for product recovery [40, 52] and process
redesign in order to reduce solid waste [44].
4.3.4. Group D: Green Deliver. The practices categorized
in this group are those that minimize the environmental
impact of products’ delivered in terms of transportation
and packaging. For example, companies can employ a more
environmentally friendly transportation method [44] and use
recyclable or reusable packaging [53] to decrease the burden
of the products delivery operations on the environment.
4.3.5. Group E: Green Consumption and Customer Manage-
ment. This group of practices follows two main objectives.

The first objective is to promote a green image and encourage
the customers to purchase green or recovered products and
components. The second objective is to provide the customers
with insights into green consumption so that they could use
Manufacturing
(C)
Raw
materials
Internal
environmental
management
system (A)
Original products
Collect
(F)
Recovery (G)
Used
products
Internal
environmental
management
system (A)

XOR
Waste Disposal
(H)
Deliver
(D)
Internal
environmental
management
system (A)
Internal
environmental
management
system (A)
Internal
environmental
management
system (A)
Influential
stakeholders’
control
(I)
Influential
stakeholders’

control
(I)
Influential
stakeholders’
control
(I)
Influential
stakeholders’
control
(I)
Influential
stakeholders’
control
(I)
Used products
XOR
Recovered materials
Origin or
recovered
products
Recovered
products or
materials
Supply

(B)
Use
(E)
Figure 4: A process-oriented approach for categorizing
sustainable supply chain practices.
products efficiently and reduce any related environmental
impact during the stage of consumption.
Green customer management practices intend to pro-
mote green products into the market via various different
strategies. For example, recovered products could be sold
as new products or be resold as used products but at a
lower price [54]. Recovered components and materials of
used products could also be used internally by the company
itself or sold to the market within or outside the business
chain [40]. Some authors emphasized green marketing and
managing the customers’ perception of quality to promote a
green image [40, 44, 55–57]. Collaboration with customers
for environmentally conscious practices [39] can also be
considered as an effective practice to promote a green image.
4.3.6. Group F: Collection Management. Collecting used
products from customers and consumers is an important
strategic issue in a SSC. To close the supply chain loop, it
is necessary to collect and recover used products. The main
purpose of these practices is to increase the rate of collection
for used products while considering the economic and
environmental impacts. There are many different methods to
collect used products, such as taking back products by law or
contract, returning products by off-lease or off-rent contracts
[40].
4.3.7. Group G: Recovery Management. The main objective of

the practices within this group is to minimize the generated
waste by recovering the used-products in terms of repairing,
refurbishing and remanufacturing, or recycling materials
whenever possible [40].
4.3.8. Group H: Waste Disposal. The waste disposal prac-
tices originated from the effect-directed approach, which is
a less integrated approach to manage an environmentally
conscious supply chain [22]. Some examples of practices
categorized in this group are cooperation with waste man-
agement companies [40] and proper disposal of hazardous
materials/chemicals/equipment.
4.3.9. Group I: Influential Stakeholder Management. Practices
categorized under this group aim to minimize the cost of
meeting the regulators’ requirements and to increase the
company’s flexibility and responsiveness by influencing the
key stockholders. The central theme of these initiatives is
to leverage on co-operating practices. For instance, involve-
ment of a large number of companies in the process of
environment-related legislation could influence the draft for
the new legislation [40, 41]. Another example of practices
under this group is cooperation with stockholders of the
remanufacturing supply chain [56].
Table 4: Sustainable supply chain practices presented in the
literature.
A: internal environmental management
(1) Commitment for GSCM from senior managers [39]
(2) Support for GSCM from mid-level managers [39]
(3) Cross-functional cooperation for environmental

improvements [39]
(4) Total quality environmental management [39]
(5) ISO 14000 certification [39]
(6) Environmental compliance and auditing programmes [39]
(7) Environmental management systems exist [39]
B: green supply and supplier management
B1: green supply and purchasing
(8) Use of used products as a valuable source of components
and materials [40]
(9) Use of environmentally friendly raw materials [44]
(10) Substitution of polluting and hazardous materials/parts [44,
53]
(11) Use of the company waste of others [44]
(12) Providing design specification to suppliers that include
environmental requirements for purchased item [49]
(13) Supplier selection involving environmental criteria [44]
(14) Urging suppliers to establish environmental management
systems [44]
B2: supplier environmental collaboration
(15) Providing suppliers with educational, technical, and
financial support to establish and implement their own
environmental
programme [44, 121]
(16) Holding awareness seminars for suppliers on
environmentally conscious actions and their benefits [44]
(17) Facilitating sharing knowledge and lessons learned relating
to environmental issues between different suppliers [44]
(18) Collaboration with suppliers to provide materials,
equipment, parts, and services that support environmental goals
[49]
(19) Involving component suppliers in product design [40]
(20) Environmental audit of suppliers’ internal management
[49]
(21) Second-tier supplier environmentally friendly practice
evaluation [39]
Joint long-term programmes to develop green innovations and

solutions [121]
C: green manufacturing
C1: product eco-design
(22) Design of products for reduced consumption of material
and energy [49]
(23) Design of products to reduce or avoid pollution and waste
generation in product usage and/or in their manufacturing
process [49]
(24) Design of products to avoid or reduce the use of hazardous
materials in products/or their manufacturing process [49]
(25) Design of products for reuse, recycling, recovery of
materials, components, and parts [49]
(26) Design of products for remanufacturing, repair, rework,
and refurbishing activities [19]
(27) Product design considering product life cycle costs [56]
C2: green process design
(28) Optimization of production planning and manufacturing
processes to reduce waste and optimize material exploitation
[44]
(29) Optimization of manufacturing processes to reduce energy
and natural resource consumption [44]
(30) Optimization of manufacturing processes to reduce solid
and water waste, and air emissions [44]
(31) Optimization of manufacturing processes to reduce noise
pollution [44]
C3: use of clean energy and technology
(32) Use of clean technology to make savings [44]
(33) Use of clean sources of energy [44]
D: green deliver
D1: green distribution and transportation
(34) Use of more environmentally friendly transportation
method [44]
D2: green packaging
(35) Use of recyclable or reusable packaging/containers in
logistics [53]
(36) Use of ecological materials for primary packaging [53]

Table 4: Continued.
E: green consumption and customer management
E1: green consumption management
(37) Eco-labelling of products [44]
(38) Green marketing and managing customer’s perception of
quality to promote green image [40]
(39) Environmental pricing to promote extended product
responsibility [122]
(40) Providing consumers with information on environmental
friendly products and/or production methods [44]
(41) Providing instructions for environmentally friendly use of
products [22]
E2: customer environmental collaboration
(42) Cooperation with customer for eco-design [39]
(43) Cooperation with customer for cleaner production [39]
(44) Cooperation with customer for green packaging [39]
F: collection management
(45) To collect used products in an effective way (directly from
customers or from used products broker, directly by companies
or by a
retailer/third service provider) in order to facilitate collection
activities and to increase the amount of used products’ return
[22, 40, 55, 123]
(46) To take back products by law or by contract [22, 40]
(47) Buyback pricing with regard to the targeted amount for
collecting and the price of competitors [124]
G: recovery management
G1: material recovery
(48) Internal recycling of materials within production phase
[44]

(49) Taking back packaging [44]
(50) Labelling material packages for retrieval purposes [53]
G2: product recovery
(51) Recovery of the company’s end-of-life products [44]
(52) Recover products whenever possible and choose the
product recovery and disposition options based on product
characteristics
and technical feasibility, supply of components and materials,
demand for recovered products and economical and
environmental
impacts [40]
G3: investment recovery
(53) Sale of excess inventories/materials [49]
(54) Sale of scrap and used materials [49]
(55) Sale of excess capital equipment [49]
H: waste disposal
(56) Disposal of hazardous materials/chemicals/equipment [49]
(57) Cooperation with waste-management companies [40]
I: influential stakeholder management
(58) Publicizing environmental efforts, promoting industry
cooperative efforts and collaboration [41]
(59) To manage the competitors by imposing a set of private
regulations or by shaping the governmental rules [125]
5. A Conceptual Framework for Configuring
SSC Practices, Processes, and Structures
The design components of a SSC including SSC practices,
processes, and structures have been identified and described
in the previous section. The process-oriented approach
applied to categorize SSC practices could be considered as an
initial effort to configure these components. Table 5 demon-
strates the match between the SSC practices, processes, and
structures at a glance.

From a configurational approach, a central theme is
required to be created in order to harmonize the design com-
ponents. Miller [7] considered different kinds of competitive
strategy to create this central theme and suggested different
strategic configurations. As it is important to create long-
term economic benefit and competitive advantage for a SSC,
this study adopted Miller’s [7] approach to create different
configurations of a SSC. Also, for this purpose, this study
also refers to the NRBV [14, 15] to understand how the
environmental strategies could provide sustainable value for
shareholders, and, consequently, competitive advantage for
the firms.
NRBV [14, 15] states that there are interconnected strate-
gies to address environmental drivers, namely, “pollution pre-
vention”, “clean technology”, and “product stewardship”, which
can provide sustainable value for shareholders in terms of
Table 5: A harmonized categorization of sustainable supply
chain practice, processes, and structures.
Practices Processes Structures
Internal environmental management Mechanisms and systems
for implementing processes
Green supply and purchasing Source Forward supply chain
Supplier environmental collaboration Source Forward supply
chain
Product eco-design Make Forward supply chain
Green process design Make Forward supply chain
Use of clean energy and technology Make Forward supply chain

Green distribution and transportation Deliver Forward supply
chain
Green packaging Deliver Forward supply chain
Green consumption management Use Forward supply chain
Customer environmental collaboration Use Forward supply
chain
Collection management Collect Collection networks
Material recovery Recover Recycling networks
Product recovery Recover Reprocessing networks
Investment recovery Recover Collection networks
Waste disposal Disposal Waste disposal networks
Influential stakeholder management Managing the external
drivers/regulations that control the processes
“risk and cost reduction”, “innovation and repositioning”, and
“reputation and legitimacy”, respectively. Considering these
three kinds of environmental strategy, three configurations
for SSC can be organized: efficient SSC adopting pollution
prevention strategy; innovative SSC adopting clean technol-
ogy strategy; and reputed SSC adopting product stewardship
strategy. These configurations are further explained in the
following paragraphs.
Efficient SSCs. Is the first type of SSC configuration, which
can
be used by companies adopting the “pollution prevention”
strategy in order to reduce their cost and risk. They aim
to reduce, change, or prevent the emissions by involving
practices, such as material substitution, recycling of materials
internally in the company, and process innovation [14, 15].
This approach, also known as waste-directed or emission-
directed, is a more integrated approach compared to the
effect-directed approach, which only deals with waste dis-
posal issues [22]. According to [14], this strategy can build
new capabilities in operations and develop the key resource
of continuous improvement to provide cost and risk reduction

advantages for the firms.
Innovative SSC. Is the second type of SSC configuration that
can be used by companies adopting a “clean technology”
strategy. These companies search for innovative solutions
to tackle environmental problems and sustainable supply
challenges by depending on more sustainable and clean tech-
nologies. Clean technologies can provide the opportunities
for the organizations to reposition their internal skills and
capabilities to gain benefits from future markets. Innovation
and repositioning are the values that firms would propose to
their shareholders through the implementation of this kind
of environmental strategy [15].
Reputed SSC. Is the third type of SSC configuration that can
be used by the companies adopting a “product stewardship”
strategy. These companies attempt to integrate different stake-
holder’s views into the business processes to provide reputa-
tion and legitimacy for the firm. Product stewardship, which
involves the whole chain from raw materials to the disposal
of generated waste, is a more integrated approach compared
to pollution prevention. Some practices that organizations
can consider to create sustainable value to their shareholders
through this strategy are green marketing efforts relating
customers’ purchasing actions to sustainability conscious
decisions; life cycle management considering the costs and
benefits of products beyond the internal boundaries of the
firms (from the sources of materials to disposal of the ultimate
waste by end-users); and closing the supply chain loop by
converting the wastes into new inputs and re-entering the
used materials and products in the production cycle [14, 15].
By implementing the product stewardship strategy, firms
might gain the competitive advantage of being the first mover
in future markets. This can be the result of acquiring limited
resources for producing green products or establishing a set
of new and tailored rules and regulations in interaction with

influential stakeholders [14].
As can be seen from Figure 5, the drivers from various
stakeholders influence the companies’ decisions for selecting
the appropriate environmental strategy. The consequent val-
ues expected to be created by this strategy can be considered
as a central theme for configuring the SSC. These drivers can
either be external or internal. Examples of external drivers are
regulators, customers, suppliers, green associations, NGOs,
and competitors that drive the company to implement green
practices to meet their expectations [58, 59]. Internal drivers
[58, 59] could be the firm’s environmental mission and
competitive strategy which motivate the company to seek
Innovation and
repositioning
Regulator; customer; suppliers; competitors; society; firm’s
competitive strategy
Values Drivers
Processes Structure
Plan
Source Make Deliver
CollectRecoverDisposal
Collection

Recycling
Reprocessing
Waste treatment
Forward supply chain
Use
Environmental strategies
Pollution
prevention
Clean
technology
Product
stewardship
Reputation and
legitimacy
Cost and
risk reduction
Sustainable supply chain practices
Internal environmental management
Green supply and supplier management
Green manufacturing
Green deliver
Green consumption and customer
management
Collection management

Recovery management
Waste disposal
Influential stakeholder management
Central theme
∙
∙
∙
∙
∙
∙
∙
∙
∙
Figure 5: A conceptual framework for designing a sustainable
supply chain.
for environmentally friendly solutions that not only meet
the external stakeholders’ requirements, but also improve the
firm’s competitiveness.
After selecting the dominant environmental strategy, the
appropriate configuration of SSC practices, processes, and
structures can be designed. Firstly, the core practices should
be determined by considering the central theme. Secondly,
the processes and structures should be designed to implement

these practices while simultaneously following the central
theme.
Table 4 shows the recommended matching of processes
and networks with the appropriate SSC practices. Table 6
briefly describes how these processes and networks should
be designed to configure each of the three above-mentioned
configurations. These recommendations for core practices,
processes, and networks are based on the central theme
and philosophy of each kind of environmental strategy, as
presented in this section.
6. Conclusion and Research Implications
Pressure from different stakeholders to integrate sustainabil-
ity conscious aspects in business practices has driven enter-
prises to adopt a variety of green initiatives in their supply
chain. It goes without saying that no business can address
all of these practices due to resource and budget limitations
[60]. Therefore, they have to make a decision in selecting the
most strategic practices for their business, and, subsequently,
Table 6: Different configurations of a sustainable supply chain.
Efficient SSC Innovative SSC Reputed SSC
Central theme Cost and risk reduction [15] Innovation and
repositioning[15] Reputation & legitimacy [15]
Dominant environmental
strategy Pollution prevention [15] Clean technology [15]

Product stewardship [15]
Philosophy Minimize waste and emissionsfrom operations [15]
Develop the sustainable
competencies of the future [15]
Integrate stakeholders views into
business process [15]
Core practices (i) Green supply and purchasing(ii) Green
process design
(i) Product eco-design
(ii) Use of clean energy and
technology
(i) Supplier environmental
collaboration
(ii) Customer environmental
collaboration
(iii) Influential stakeholder
management
(iv) Material & product, recovery
Processes Standard and procedural Innovative and fast response
Collaborative
Networks Centralized [34] Decentralized [34]
Joint venture or alliance with
reputed networks in industry
[34]
Closed loop [15, 34]
provide the appropriate infrastructure for implementing such
practices. In other words, the company has to decide on

the desired values created by the implementation of these
practices and then design the whole sustainable supply
chain (SSC) to offer these values as much as possible. By
considering this requirement, this study has embarked on
a process-oriented approach to produce a comprehensive
list of SSC practices classified into nine groups, namely,
internal environmental management, green supply and sup-
plier management, green manufacturing, green deliver, green
consumption and customer management, collection manage-
ment, recovery management, waste disposal, and influential
stakeholder management. The process-oriented approach to
classify these practices provides a basis for matching the
practices to the processes and structures. The main processes
are plan, source, make, deliver, use, collect, recover, and
waste disposal. The structures include both forward and
reverse supply chain networks in which the reverse networks
are categorized into four distinctive structures: the waste
treatment, collection, reprocessing, and recycling networks.
Afterwards, by applying a configuration approach [7,
8], three kinds of SSC configuration are suggested, namely,
efficient SSC, innovative SSC, and reputed SSC. These con-
figurations are developed based on the philosophy of various
environmental strategies proposed by [14, 15] with an empha-
sis on the natural-resourced-based view (NRBV).
Efficient SSCs follow the pollution prevention [14, 15]
strategy, which intends to minimize the waste and emissions
from the operations. The central theme for this configuration
is cost and risk reduction. Core practices to meet the require-
ments of this environmental strategy could be green supply
and purchasing, green process design, and material, product,
and investment recovery. The processes would be designed
to be costeffective, thus they are usually standardised and
procedural. A centralized design of structures [34] might lead
to cost reduction throughout the whole chain.

Innovative SSCs follow the clean technology strategy [15],
which intends to develop the competencies for innovative
development and future shaping. The central theme for this
configuration is innovation and repositioning. Product eco-
design and use of clean energy and technology are the
core practices to meet this configuration’s requirements.
Processes are usually flexible and innovative to provide the
rapid development of competencies required for the future.
Decentralized structures [34] could also be considered as a
solution for designing the reverse networks to provide a basis
for rapid development.
Reputable SSCs follow the product stewardship strategy
[14, 15], which intends to integrate stakeholder views into the
business process. The central theme for this configuration is
reputation and legitimacy. Collaborative practices in terms of
collaboration with suppliers and customers and involving the
influential stakeholders in business practices can be consid-
ered as core practices in this configuration. Processes should
also be designed for effective collaboration with influential
stakeholders. Reverse networks in this kind of configuration
can also be developed by a joint approach through an alliance
with existing reputable networks in the industry. While
designing the networks for this configuration, closing the
loop is also a critical measure.
This study has applied a process-oriented approach
to classify SSC practices in addition to a configurational
approach for configuring these practices with the processes
and structure. It forms the initial efforts in developing a
framework for sustainable supply chain design (SSCD). By
configuring and harmonizing the design components of a
SSC, this framework could assist companies to gain more
benefit from implementing sustainability conscious practices.
Future research for validating these configurations, such as

conducting a series of case studies involving organizations
from various industries, would develop this field of research
further.
Moreover, future studies for exploring the particular SSC
practices in various industries and customizing the list of
SSC practices for each unique combination of industries and
configurations might develop the field further.
Once the framework is validated, the measurement meth-
ods can be developed to determine the degree of alignment
of existing configurations to that of the standard configura-
tion presented in the framework. Finally, this measurement
method would provide a quantitative research framework for
analysing the link between an appropriately configured SSC
and the firm’s performance and competitiveness.
Conflict of Interests
The authors declare that there is no conflict of interests
regarding the publication of this paper.
Acknowledgment
The authors would like to extend their appreciation to
University of Malaya for the Postgraduate Research Fund
(Grant no. PV087/2011A) that made this study and paper
possible.
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Stochastic Analysis
Systems Based on the Q System
Two systems based on the Q system are the two-bin system and
the base-stock system.
Two-Bin System
The concept of a Q system can be incorporated in a visual
system, that is, a system that allows employees to place orders
when inventory visibly reaches a certain marker. Visual systems
are easy to administer because records are not kept on the
current inventory position. The historical usage rate can simply
be reconstructed from past purchase orders. Visual systems are
intended for use with low-value SKUs that have a steady
demand, such as nuts and bolts or office supplies. Overstocking
is common, but the extra inventory holding cost is minimal
because the items have relatively little value.

visual system
A system that allows employees to place orders when inventory
visibly reaches a certain marker.
A visual system version of the Q system is the two-bin system
in which a SKU’s inventory is stored at two different locations.
Inventory is first withdrawn from one bin. If the first bin is
empty, the second bin provides backup to cover demand until a
replenishment order arrives. An empty first bin signals the need
to place a new order. Premade order forms placed near the bins
let workers send one to purchasing or even directly to the
supplier. When the new order arrives, the second bin is restored
to its normal level and the rest is put in the first bin. The two-
bin system operates like a Q system, with the normal level in
the second bin being the reorder point R. The system also may
be implemented with just one bin by marking the bin at the
reorder point level.
two-bin system
A visual system version of the Q system in which a SKU’s
inventory is stored at two different locations.
Base-Stock System
In its simplest form, the base-stock system issues a
replenishment order, Q, each time a withdrawal is made, for the
same amount as the withdrawal. This one-for-one replacement
policy maintains the inventory position at a base-stock level
equal to expected demand during the lead time plus safety

stock. The base-stock level, therefore, is equivalent to the
reorder point in a Q system. However, order quantities now vary
to keep the inventory position at R at all times. Because this
position is the lowest IP possible that will maintain a specified
service level, the base-stock system may be used to minimize
cycle inventory. More orders are placed, but each order is
smaller. This system is appropriate for expensive items, such as
replacement engines for jet airplanes. No more inventory is held
than the maximum demand expected until a replacement order
can be received.
base-stock system
An inventory control system that issues a replenishment order,
Q, each time a withdrawal is made, for the same amount of the
withdrawal.
Calculating Total Q System Costs
Total costs for the continuous review (Q) system is the sum of
three cost components:
Total cost = Annual cycle inventory holding cost + annual
ordering cost + annual safety stock holding cost C = Q 2 ( H ) +
D Q ( S ) + ( H ) ( Safety stock )
The annual cycle-inventory holding cost and annual ordering
cost are the same equations we used for computing the total
annual cycle-inventory cost in Example 9.2. The annual cost of
holding the safety stock is computed under the assumption that
the safety stock is on hand at all times. Referring to Figure 9.10

in each order cycle, we will sometimes experience a demand
greater than the average demand during lead time, and
sometimes we will experience less. On average over the year,
we can assume the safety stock will be on hand. See Solved
Problems 4 and 6 at the end of this chapter for an example of
calculating the total costs for a Q system.
Advantages of the Q System
The primary advantages of Q systems are the following:
1. The review frequency of each SKU may be individualized.
Tailoring the review frequency to the SKU can reduce total
ordering and holding costs.
2. Fixed lot sizes, if large enough, can result in quantity
discounts. The firm’s physical limitations, such as its truckload
capacities, materials handling methods, and shelf space might
also necessitate a fixed lot size.
3. The system requires low levels of safety stock for the
amount of uncertainty in demands during the lead time.
Periodic Review System
An alternative inventory control system is the periodic review
(P) system, sometimes called a fixed interval reorder system or
periodic reorder system, in which an item’s inventory position
is reviewed periodically rather than continuously. Such a system
can simplify delivery scheduling because it establishes a

routine. A new order is always placed at the end of each review,
and the time between orders (TBO) is fixed at P. Demand is a
random variable, so total demand between reviews varies. In a P
system, the lot size, Q, may change from one order to the next,
but the time between orders is fixed. An example of a periodic
review system is that of a soft-drink supplier making weekly
rounds of grocery stores. Each week, the supplier reviews the
store’s inventory of soft drinks and restocks the store with
enough items to meet demand and safety stock requirements
until the next week.
periodic review ( P ) system
A system in which an item’s inventory position is reviewed
periodically rather than continuously.
Under a P system, four of the original EOQ assumptions are
maintained: (1) no constraints are placed on the size of the lot,
(2) the relevant costs are holding and ordering costs, (3)
decisions for one SKU are independent of decisions for other
SKUs, and (4) lead times are certain and supply is known.
However, demand uncertainty is again allowed for. Figure 9.13
shows the periodic review system under these assumptions. The
downward-sloping line again represents on-hand inventory.
When the predetermined time, P, has elapsed since the last
review, an order is placed to bring the inventory position,
represented by the dashed line, up to the target inventory level,
T. The lot size for the first review is Q1, or the difference

between inventory position IP1 and T. As with the continuous
review system, IP and OH differ only during the lead time.
When the order arrives at the end of the lead time, OH and IP
again are identical. Figure 9.13 shows that lot sizes vary from
one order cycle to the next. Because the inventory position is
lower at the second review, a greater quantity is needed to
achieve an inventory level of T.
FIGURE 9.13 P System When Demand Is Uncertain
MyOMLab Animation
EXAMPLE 9.8 Determining How Much to Order in a P System
Return to the distribution center (DC) in Example 9.5. Suppose
that management wants to use a periodic review system for the
Sony TV sets. The first review of the inventory is scheduled for
the end of Day 2. Assume that all demands and receipts occur at
the end of the day. On the scheduled review day, inventory
replenishment orders are placed after the demands and receipts
have been accounted for. The lead time is 5 days, and
management has set T = 620 and P = 6 days. Given the demand
schedule in the table below, determine how much to order (Q)
using a P system.
SOLUTION
We use the following equations:
Inventory Position ( IP ) = OH + SR − BO Order Quantity ( Q )
= T − IP
Day

Demand
OH
SR
BO
IP
Q
1
50
400
400

2
60
340
280 after ordering
340 before ordering
340 + 280 = 620 after ordering
620 − 340 = 280 (due Day 7)
3
80
260
280
260 + 280 = 540

4
40
220
280
220 + 280 = 500
5
75
145
280

145 + 280 = 425
6
55
90
280
90 + 280 = 370
7
95
90 + 280 − 95 = 275

275 + 0 = 275
8
50
225
395 after ordering
225 + 0 = 225 before ordering
620 − 225 = 395 (due Day 13)
9
45
180
395

180 + 395 = 575
10
30
150
395
150 + 395 = 545
11
50
100

395
100 + 395 = 495
12
60
40
395
40 + 395 = 435
13
40
40 + 395 − 40 = 395

395 + 0 = 395
14
50
345
275 after ordering
345 + 0 = 345 before ordering
620 − 345 = 275 (due Day 19)
DECISION POINT
The figure to the right shows the relationship between on-hand
inventory and the inventory position. The DC did not experience

any backorders because on Day 7 the replenishment order
arrived in the nick of time. Notice that the order quantities vary
in size while the time between orders remains a constant.
Compare the operation of the P system in this example to the Q
system in Example 9.5. The Q system requires constant
monitoring to determine when the order point is reached.
However, the average daily inventory is only 188 sets,
compared to 226 sets for the P system. Granted, the Q system
experienced backorders because of some unexpectedly large
orders. Nonetheless, it is a general rule that to gain the benefits
of periodic ordering, the P system requires more inventory for
the same level of protection against stock-outs or backorders.
We will see why this is the case as we develop the parameters
for the P system.
Selecting the Time between Reviews
To run a P system, managers must make two decisions: the
length of time between reviews, P, and the target inventory
level, T. Let us first consider the time between reviews, P. It
can be any convenient interval, such as each Friday or every
other Friday. Another option is to base P on the cost trade-offs
of the EOQ. In other words, P can be set equal to the average
time between orders for the economic order quantity, or
TBOEOQ. Because demand is variable, some orders will be
larger than the EOQ and some will be smaller. However, over
an extended period of time, the average lot size should be close

to the EOQ. If other models are used to determine the lot size
(e.g., those described in Supplement C, “Special Inventory
Models”), we divide the lot size chosen by the annual demand,
D, and use this ratio as P. It will be expressed as the fraction of
a year between orders, which can be converted into months,
weeks, or days as needed.
Large, fixed capacity modes of transportation require defined
schedules of operation. Such a situation supports the use of
periodic review systems. Here ocean vessels await loads of
petro-chemicals at the Vopak terminal in the Port of Rotterdam.
Selecting the Target Inventory Level When Demand Is Variable
and Lead Time Is Constant
Now, let us calculate the target inventory level, T, when
demand is variable but the lead time is constant. Figure 9.13
reveals that an order must be large enough to make the
inventory position, IP, last beyond the next review, which is P
time periods away. The checker must wait P periods to revise,
correct, and reestablish the inventory position. Then, a new
order is placed, but it does not arrive until after the lead time,
L. Therefore, as Figure 9.13 shows, a protection interval of P +
L periods is needed. A fundamental difference between the Q
and P systems is the length of time needed for stockout
protection. A Q system needs stockout protection only during
the lead time because orders can be placed as soon as they are
needed and will be

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