Title
Designing replenishment rules in a two-echelon supply chain with a flexible or an inflexible capacity strategy Designing replenishment rules in a two-echelon supply chain with a flexible or an inflexible capacity strategy
Author
Faculty/Department
Faculty of Sciences. Mathematics and Computer Science
Publication type
article
Publication
Amsterdam ,
Subject
Economics
Mathematics
Engineering sciences. Technology
Source (journal)
International journal of production economics. - Amsterdam
Volume/pages
119(2009) :1 , p. 187-198
ISSN
0925-5273
ISI
000266646700016
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
We consider a two-echelon supply chain where a single retailer holds an inventory of finished goods to satisfy an i.i.d. customer demand, and a single manufacturer produces the retailer's replenishment orders on a make-to-order basis. The objective of this paper is to analyse the impact of the retailer's replenishment policy on total supply chain performance. We consider two strategies with regard to the production capacity. In a flexible capacity strategy, the manufacturer invests in excess capacity to guarantee constant lead times in order to keep inventories low. The amount of investment depends on the retailer's order pattern. In an inflexible capacity strategy, the capacity is limited and independent of the retailer's replenishment decision. This results in stochastic lead times, thereby inflating the retailer's inventory requirements. We treat the variability of the order rate of the retailer as the primary decision variable to minimise total supply chain costs. The objective is to find the value of the replenishment parameter â (parameter to tune the order variability) that minimises total supply chain costs in a flexible and inflexible capacity scenario.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/063f17/4480.pdf
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