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A Sensitivity Analysis of the Optimal Inventory Control for a Vertically Integrated Supply Chain  

Kim, Engab (College of Business Administration, Ewha Womans University)
Publication Information
Journal of Korean Institute of Industrial Engineers / v.30, no.3, 2004 , pp. 197-204 More about this Journal
Abstract
This paper deals with a supply chain with a company and its contractor that produces products by the OEM contract with the company. The supply chain of interest has two distinct features. First, the company is the supplier of raw material required in the production at the contractor. Second, the company and its contractor make a delivery shipment arrangement that the replenishment lead time is determined depending on demand process. We show that the optimal inventory policy is monotonically changed as either the replenishment setup cost or inventory holding cost becomes increased or decreased. We also present asymptotic properties of the optimal inventory policy when either the number of outstanding customer orders or the inventory level becomes very large.
Keywords
supply chain management; OEM; nventory management; sensitivity analysis;
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