IS POOLING LEAD‐TIME RISK BY SPLITTING ORDERS SIMULTANEOUSLY WORTHWHILE?

A large body of research is based on the proposition that pooling lead‐time risk by splitting orders simultaneously can offer significant opportunities to reduce inventory system costs. This paper investigates that proposition for a broad range of industry conditions, as well as for a high‐tech company in a global setting. The investigation considers important cost elements not included in previous work to conduct a realistic assessment of the value proposition. The results indicate that, even under favorable conditions, the proposition is worthwhile only when lead‐time variability and unit values are unusually high. Managerial implications and new research directions are discussed in light of these findings.