Rising inventory costs and lower inventory turnover due to long lead times and supply/demand volatility have led to a need for our sponsor company, Tempur Sealy International, to reassess its sourcing, inventory, and deployment strategy for its adjustable base category. We develop a linear program optimization model capable of analyzing various network configurations, comparing direct-to-distribution center and hub & spoke models, and sourcing decisions, comparing offshore and nearshore suppliers, to define the optimal supply chain network. We conduct scenario analysis using a Monte Carlo simulation to understand how various design decisions affect cost and service. Additionally, we leverage our model to execute forward-looking supply planning for various scenarios, using demand forecasts for the next year to identify opportunities for nearer-term cost savings opportunities. Our capstone provides Tempur Sealy with actional insights for quantifying the cost and service impacts of inventory decisions, network flow paths, and supplier sourcing decisions.
