Proceedings of the Society of Korea Industrial and System Engineering Conference (한국산업경영시스템학회:학술대회논문집)
- 2002.05a
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- Pages.343-348
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- 2002
A Long-term Replenishment Contract for the ARIMA Demand Process
ARIMA 수요자정을 고려한 장기보충계약
Abstract
We are concerned with a long-term replenishment contract for the ARIMA demand process in a supply chain. The chain is composed of one supplier, one buyer and consumers for a product. The replenishment contract is based upon the well-known (s, Q) policy but allows us to contract future replenishments at a time with a price discount. Due to the larger forecast error of future demand, the buyer should keep a higher level of safety stock to provide the same level of service as the usual (s, Q) policy. However, the buyer can reduce his purchase cost by ordering a larger quantity at a discounted price. Hence, there exists a trade-off between the price discount and the inventory holding cost. For the ARIMA demand process, we present a model for the contract and an algorithm to find the number of the future replenishments. Numerical experiments show that the proposed algorithm is efficient and accurate.