Dual Sourcing With Unreliable Suppliers In A Continuous Review Inventory Systems
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Dual Sourcing With Unreliable Suppliers In A Continuous Review Inventory Systems
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Author : Jose Nicolas Robayo Bargans
language : en
Publisher:
Release Date : 2006
Dual Sourcing With Unreliable Suppliers In A Continuous Review Inventory Systems written by Jose Nicolas Robayo Bargans and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Effective Multi Echelon Inventory Systems For Supplier Selection And Order Allocation
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Author : Cong Guo (Industrial engineer)
language : en
Publisher:
Release Date : 2014
Effective Multi Echelon Inventory Systems For Supplier Selection And Order Allocation written by Cong Guo (Industrial engineer) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with Business logistics categories.
Successful supply chain management requires an effective sourcing strategy to counteract uncertainties in both the suppliers and demands. Therefore, determining a better sourcing policy is critical in most of industries. Supplier selection is an essential task within the sourcing strategy. A well-selected set of suppliers makes a strategic difference to an organization's ability to reduce costs and improve the quality of its end products. To discover the cost structure of selecting a supplier, it is more interesting to further determine appropriate levels of inventory in each echelon for different suppliers. This dissertation focuses on the study of the integrated supplier selection, order allocation and inventory control problems in a multi-echelon supply chain. First, we investigate a non-order-splitting inventory system in supply chain management. In particular, a buyer firm that consists of one warehouse and N identical retailers procures a type of product from a group of potential suppliers, which may have different prices, ordering costs, lead times and have restriction on minimum and maximum total order size, to satisfy stochastic demand. A continuous review system that implements the order quantity, reorder point (Q, R) inventory policy is considered in the proposed model. The model is solved by decomposing the mixed integer nonlinear programming model into two sub-models. Numerical experiments are conducted to evaluate the model and some managerial insights are obtained with sensitivity analysis. In the next place, we extend the study to consider the multi-echelon system with the order-splitting policy. In particular, the warehouse acquisition takes place when the inventory level depletes to a reorder point R, and the order Q is simultaneously split among m selected suppliers. This consideration is important since it could pool lead time risks by splitting replenishment orders among multiple suppliers simultaneously. We develop an exact analysis for the order-splitting model in the multi-echelon system, and formulate the problem in a Mixed Integer Nonlinear Programming (MINLP) model. To demonstrate the solvability and the effectiveness of the model, we conduct several numerical analyses, and further conduct simulation models to verify the correctness of the proposed mathematical model.
Tailored Base Surge Policies In Dual Sourcing Inventory Systems With Demand Learning
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Author : Boxiao Chen
language : en
Publisher:
Release Date : 2019
Tailored Base Surge Policies In Dual Sourcing Inventory Systems With Demand Learning written by Boxiao Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
We consider a periodic-review dual-sourcing inventory system, in which the expedited supplier is faster and more costly, while the regular supplier is slower and cheaper. Under full demand distributional information, it is well-known that the optimal policy is extremely complex but the celebrated Tailored Base-Surge (TBS) policy performs near optimally. Under such a policy, a constant order is placed at the regular source in each period, while the order placed at the expedited source follows a simple order-up-to rule. In this paper, we assume that the firm does not know the demand distribution a priori, and makes adaptive inventory ordering decisions in each period based only on the past sales (a.k.a. censored demand) data. The standard performance measure is regret, which is the cost difference between a feasible learning algorithm and the clairvoyant (full-information) benchmark. When the benchmark is chosen to be the (full-information) optimal Tailored Base-Surge policy, we develop the first nonparametric learning algorithm that admits a regret bound of O(T^{1/2} (log T)^{3} loglog T), which is provably tight up to a logarithmic factor. Leveraging the structure of this problem, our approach combines the power of bisection search and stochastic gradient descent and also involves a delicate high probability coupling argument between our and the clairvoyant optimal system dynamics. We also develop several technical results that are of independent interest.
An Approximate Policy For A Dual Sourcing Inventory Model With Positive Lead Times And Binomial Yield
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Author : Wanrong Ju
language : en
Publisher:
Release Date : 2014
An Approximate Policy For A Dual Sourcing Inventory Model With Positive Lead Times And Binomial Yield written by Wanrong Ju and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
This paper studies the inventory system of a retailer who orders his products from two supply sources, a local one that is responsive and reliable, but expensive, and a global one that is low-cost but less reliable. The deliveries from the global source only partially satisfy the quality requirements. We model this situation with a dual-sourcing inventory model with positive lead times and random yield. We propose a dual-index order-up-to policy (DOP) based on approximating the inventory model with an unreliable supplier by a sequence of dual-sourcing models with reliable suppliers and suitably modified demand distributions. Numerical results show that the performance of this heuristic is close to that of the optimal DOP. Moreover, we extend the heuristic to models with advance yield information and study its impact on the total inventory costs.
Robust Dual Sourcing Inventory Management
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Author : Jiankun Sun
language : en
Publisher:
Release Date : 2019
Robust Dual Sourcing Inventory Management written by Jiankun Sun and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
(1) Problem Definition: How to dynamically replenish inventory from two supply sources or shipping modes with general lead times. The fast source is more expensive than the slow source.(2) Academic/Practical Relevance: Dual sourcing provides supply chain flexibility to mitigate demand and supply risk. Despite its relevance in practice, characterizing the optimal dual sourcing policy is extremely challenging, and the optimal stochastic policy for non-consecutive lead times has been unknown for over 50 years.(3) Methodology: We present and solve a robust rolling horizon model for periodically reviewed dual sourcing inventory systems that minimizes the total cost of purchasing, inventory holding and backlogging.(4) Results: We prove that the optimal robust policy is a dual index, dual base-stock policy that constrains or “caps” the slow order and provide closed-form expressions for the three control parameters. The optimality result is established for general lead times and can accommodate non-stationary demand. Our numerical study shows that as the lead time difference grows, the capped dual index policy increasingly smooths slow orders and, for stationary demand, converges to the tailored base surge policy, which places a constant slow order and has been shown to be asymptotically optimal.(5) Managerial Implications: Our capped dual index policy is easy to understand, explain and implement in practice. In an extensive simulation study, the capped dual index policy performs as well as, and can even outperform, the best heuristics presented in the stochastic inventory literature.
Behavioral Decisions In Inventory Systems With Dual Sourcing Option
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Author : Tamás Csermely
language : en
Publisher:
Release Date : 2015
Behavioral Decisions In Inventory Systems With Dual Sourcing Option written by Tamás Csermely and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Dual sourcing practices have become increasingly popular with firms. To examine the actual behavior in such settings, we conducted a laboratory experiment with a multi-period single-echelon inventory model with a fast, expensive and a slow, inexpensive supplier. Compared to single-sourcing, the difference between the normatively achievable and the empirically realized cost decreases considerably. We find that the overusage of the fast supplier is driven by reference-dependent preferences. In general, subjects use order smoothing strategies and tend to choose a preferred supply mode. Furthermore, the individual variation in cognitive reflection drives cost differences: Subjects with a higher cognitive score have less random errors, order smoothing and supply line underweighting; they also overuse the fast option to a smaller extent. Our findings highlight the importance of having procurement professionals with a high cognitive reflection and the benevolent nature of the additional supply mode primarily due to its lower lead time.
Dual Sourcing
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Author : Awi Federgruen
language : en
Publisher:
Release Date : 2020
Dual Sourcing written by Awi Federgruen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
We study a finite horizon, single product, periodic review inventory system with emph{two} supply sources and a salvage option. These supply sources are typically capacitated and capacity levels often need to be reserved or installed in advance of the operational planning horizon. The supply sources may thus be differentiated by their lead times, capacities and fixed and variable order costs. Salvage options allow for inventory reductions and incur fixed cost and variable revenues. We first analyze the tactical problem of determining an optimal procurement strategy under given capacity profiles at the two suppliers. We then address the strategic model in which optimal capacity profiles are obtained based on two-part capacity contracts. We characterize the structure of optimal procurement strategies when the lead times of the two suppliers differ by a single period and the lead time for salvage opportunities matches that of one of the suppliers. However, our structural results suggest effective heuristics and upper and lower bounds for general lead time combinations.
Supply Chain Optimization Design And Management Advances And Intelligent Methods
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Author : Minis, Ioannis
language : en
Publisher: IGI Global
Release Date : 2010-12-31
Supply Chain Optimization Design And Management Advances And Intelligent Methods written by Minis, Ioannis and has been published by IGI Global this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-12-31 with Business & Economics categories.
Computational Intelligence (CI) is a term corresponding to a new generation of algorithmic methodologies in artificial intelligence, which combines elements of learning, adaptation, evolution and approximate (fuzzy) reasoning to create programs that can be considered intelligent. Supply Chain Optimization, Design, and Management: Advances and Intelligent Methods presents computational intelligence methods for addressing supply chain issues. Emphasis is given to techniques that provide effective solutions to complex supply chain problems and exhibit superior performance to other methods of operations research.
Online Learning For Dual Index Policies In Dual Sourcing Systems
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Author : Jingwen Tang
language : en
Publisher:
Release Date : 2023
Online Learning For Dual Index Policies In Dual Sourcing Systems written by Jingwen Tang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
We consider a periodic review dual sourcing inventory system with a regular source (lower unit cost but longer lead time) and an expedited source (shorter lead time but higher unit cost) under carried-over supply and backlogged demand. Unlike existing literature, we assume that the firm does not have access to the demand distribution a priori and relies solely on past demand realizations. Even with complete information on the demand distribution, it is well-known in the literature that the optimal inventory replenishment policy is complex and state-dependent. Therefore, we focus our attention on a class of popular, easy-to-implement, and near-optimal heuristic policies called the dual-index policy. The performance measure is regret, which is the cost difference between a feasible learning algorithm and the clairvoyant (full-information) benchmark. When the benchmark is chosen to be the (full-information) optimal dual-index policy, we develop a nonparametric online learning algorithm that admits a regret upper bound of $O( sqrt{T log T})$, which matches the regret lower bound for any feasible learning algorithms up to a logarithmic factor. Our algorithm integrates stochastic bandits and sample average approximation techniques in an innovative way. As part of our regret analysis, we explicitly prove that the underlying Markov chain is ergodic and converges to its steady state exponentially fast via coupling arguments, which could be of independent interest. Our work provides practitioners with an easy-to-implement, robust, and provably-good online decision support system for managing a dual-sourcing inventory system.
Dual Sourcing Under Random Supply Capacities
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Author : Burcu Tan
language : en
Publisher:
Release Date : 2015
Dual Sourcing Under Random Supply Capacities written by Burcu Tan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Sourcing from multiple suppliers with different characteristics is common in practice for various reasons. This paper studies a dynamic procurement planning problem in which the firm can replenish inventory from a fast and a slow supplier, both with uncertain capacities. The optimal policy is characterized by two reorder points, one for each supplier. Whenever the pre-order inventory level is below the reorder point, a replenishment order is issued to the corresponding supplier. Interestingly, the reorder point for the slow supplier can be higher than that of the fast even if the former has a higher cost, lower reliability, and smaller capacity than the latter, suggesting the possibility of ordering exclusively from an inferior slow supplier in the short term. Moreover, the firm may allocate a larger portion of the long-term total order quantity to the slow supplier than to the fast, even if the former does not possess any cost or reliability advantage over the latter. Such phenomena, different from the observations made in previous studies, happen when the demand is uncertain and the supply is limited or unreliable. Our observations highlight the importance of incorporating both demand uncertainty and supplier characteristics (i.e., cost, lead time, capacity and uncertainty) in a unified framework when formulating supplier selection and order allocation strategies.