Browse > Article

An Integrated Control Problem of Secondary Sourcing and Inventory in A Supply Chain  

Kim, Sung-Chul (덕성여자대학교 경영학과)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.32, no.1, 2007 , pp. 93-104 More about this Journal
Abstract
We consider a supply chain where products are shipped to warehouse from manufacturing system to customers. Products are supplied from either in-house regular manufacturing or the secondary source such as subcontractor. The inventory in warehouse is controlled by base-stock policy, that is, whenever a demand arrives from customer, an order is released to the manufacturing system. Unsatisfied demand is backlogged. The manufacturing system is modeled as M/M/s+1/c queueing system, and the orders exceeding the given limit care blocked and lost. The steady state distribution of the outstanding orders and the throughput of the manufacturing system are functions of the level of engagement In the secondary source. There is a profit obtained from throughput and cost not only due to the engagement of the secondary source in the manufacturing system but also inventory positions. We want to maximize the total production profit minus the total cost of the production system by simultaneously determining the optimal level of engagement of the secondary source and the optimal base-stock level of the inventory. We develop two algorithms : one without guarantee of the optimal solution but with the small number of computations, the other optimal but with more computations.
Keywords
Dual Sourcing; Supply Chain; Queueing System; Base-Stock Policy;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Chen, F. and Y. Zheng, 'Lower Bounds for Multi-echelon Stochastic Inventory Systems,' Management Science, Vol.40(1994), pp.1426-1443   DOI   ScienceOn
2 Iyer, A.V. and A. Jain, 'Modeling the Impact of Merging Capacity in Production-Inventory Systems,' Management Science, Vol. 50(2004), pp.1082-1094   DOI   ScienceOn
3 Johnson, M.E., and S. Whang, 'E-Business and Supply Chain Management : An Overview and Framework,' Production and Operations Management, Vol. 11(2002), pp.413-423   DOI   ScienceOn
4 Rubio, R. and L.M. Wein, 'Setting Base Stock Levels Using Product-form Queueing Networks,' Management Science, Vol.42, No.2(1996), pp.259-268   DOI   ScienceOn
5 Kelly, F.P., Reversibility and Stochastic Networks, John Wiley & Sons Ltd., 1979
6 Bradley, J.R., 'Optimal Control of a Dual Service Rate M/M/1 Production Inventory Model,' European Journal of Operational Research, Vol.161(2005), pp.812-837   DOI   ScienceOn
7 Crabill, T.B., 'Optimal control of a Service facility with Variable Exponential Service Times and Constant Arrival Rate,' Management Science, Vol.18(1972), pp.560-566   DOI   ScienceOn
8 Duenyas, I., W.J. Hopp, and Y. Bassok, 'Production Quota as Bounds on Interplant JIT Contracts,' Management Science, Vol. 43, No.10(1997), pp.1372-1386   DOI   ScienceOn
9 Clark, A. and H. Scarf, 'Optimal Bounds for a Multi-echelon Inventory Problem,' Management Science, Vol.6(1960), pp.475-490   DOI   ScienceOn
10 Gordon, P.J., Contract Manufacturing form a Global Perspective: 1999 Update, Technology Forecasters, Inc., Alameda, CA, 1999
11 Zheng, Y.S. and P. Zipkin, 'A Queueing Model to Analyze the Value of Centralized Inventory Information,' Operations Research, Vol.38(1990), pp.296-307   DOI   ScienceOn
12 Benjaafar, S., M. ElHafsi, and F. de Vericourt, 'Demand Allocation in Multiple-product, Make-to-Stock Systems,' Management Sciece, Vol.50, No.10(2004), pp.1431-1448   DOI   ScienceOn
13 Prasad, R., 'SMT Vender Selection, Qualification and management,' In : Proceedings of the Electronic Manufacturing Services Conference, San Jose, CA, (1995), pp.31-36
14 Sobel, M.J., 'Optimal Average Cost Policy for A Queue with Start-up and Shut-down Costs,' Operations Research, Vol.17(1969), pp.145-162   DOI   ScienceOn
15 Fox, B., 'Discrete Optimization via Marginal Analysis,' Management Science, Vol. 13(1969), pp.210-216   DOI   ScienceOn
16 Dellaert, N.P. and M.T Melo, 'Make-to-order Policies for a Stochastic Lot-sizing Problem Using Overtime,' International Journal of Production Economics, Vol. 56(1998), pp.56-57, 79-97