Assessing logistics process performance using the perfect order index: confidence intervals and process capability analysis Online publication date: Wed, 16-Nov-2022
by Cynthia Renea Lovelace
International Journal of Industrial and Systems Engineering (IJISE), Vol. 42, No. 3, 2022
Abstract: Perfect order fulfilment, as measured by the perfect order index (POI), has become the leading key performance indicator (KPI) for logistics service quality and overall supply chain reliability. Little research has appeared in the literature to evaluate the properties of this index and the impacts of sampling variability upon its confidence bounds. The purpose of this research is to develop confidence limits for the POI, evaluate the sensitivity of the POI point estimate to proportion component variability, and propose a new process capability index, Cpl(POI), to measure fulfilment process capability to produce a perfect order. The delta distribution was utilised to develop confidence intervals for the POI and the process capability index, Cpl(POI). Simulation was then used to develop approximate 95% and 99% lower confidence bounds for Cpl(POI), for select combinations of component proportions.
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