• Management Science and Financial Engineering
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• v.16 no.3
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• pp.21-47
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• 2010

Quantity discounts provide a practical foundation for supply chain inventory policies, improving the supplier's profit and reducing the buyer's inventory cost simultaneously. Traditional quantity-discount research, which deals with inventory coordination between a buyer and a supplier, is extended to a stationary stochastic environment. This research shows that the magnitude of the optimal discounts scheduled by the deterministic quantity discount models may not be large enough to cover the buyer's additional inventory stocking risks under uncertain conditions. As a result, the buyer's total inventory cost may often increase rather than decrease. In contrast, the proposed model allows the supplier to identify the discount level, which shares the buyer's amplified risk associated with temporary overstocking and ensures that both buyer and supplier benefit economically. The performance of the proposed model was tested in the continuous review environments via numerical experiments. The experimental results support the proposed method as a feasible alternative in coordinating inventory decisions under stochastic demand.

• Journal of the Korea Safety Management & Science
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• v.17 no.1
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• pp.265-270
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• 2015

In industrial society, the core competency of company was depend on the productivity. However the knowledge information era of the 21st century, the market power moved to downstream, the core competency of company is moved from productivity to how to make the products meet the market. Inventory was the burden of the company management. Most of company trying to reduce the inventory. In this study, analyze the impact of inventory to company's operating profit and the impact of distribution center consolidation to total inventory of company.

• Journal of the military operations research society of Korea
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• v.17 no.1
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• pp.84-104
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• 1991

Up to the present, the evaluation measures in the production and inventory management have been studied under the pre-condition that the costs for major factors(e.g,. cost of carrying inventory, cost of demand shortage) are given easily, although in practice, it is difficult. The case in which multiple participants have a different viewpoints in production and inventory management has not been studied, in spite of its frequent occurrence. This study suggests a production and inventory model with multiple objectives corresponding to major factors and the related interactive algorithm based on the preference structures of participants. The problem can be solved through a weighting vector generated by an interaction with participants. The concept of equity is also used in order to guarantee the reasonable distribution of group utility in determining the individual relative weights of participants. This study includes the reality of the model and the decision process in the production and inventory management.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.41 no.4
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• pp.220-227
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• 2018

The cooperative game theory consists of a set of players and utility function that has positive values for a subset of players, called coalition, in the game. The purpose of cost allocation method is to allocate the relevant cost among game players in a fair and rational way. Therefore, cost allocation method based on cooperative game theory has been applied in many areas for fair and reasonable cost allocation. On the other hand, the desirable characteristics of the cost allocation method are Pareto optimality, rationality, and marginality. Pareto optimality means that costs are entirely paid by participating players. Rationality means that by joining the grand coalition, players do not pay more than they would if they chose to be part of any smaller coalition of players. Marginality means that players are charged at least enough to cover their marginal costs. If these characteristics are all met, the solution of cost allocation method exists in the core. In this study, proportional method is applied to EOQ inventory game and EPQ inventory game with shortage. Proportional method is a method that allocates costs proportionally to a certain allocator. This method has been applied to a variety of problems because of its convenience and simple calculations. However, depending on what the allocator is used for, the proportional method has a weakness that its solution may not exist in the core. Three allocators such as demand, marginal cost, and cost are considered. We prove that the solution of the proportional method to demand and the proportional method to marginal cost for EOQ game and EPQ game with shortage is in the core. The counterexample also shows that the solution of the proportional method to cost does not exist in the core.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2003.05a
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• pp.1-7
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• 2003

This paper considers an Integrated one-vendor multi-buyer production-inventory model where the vendor manufactures multiple products In lot at Her associated finite production rates In the model. It is allowed for earth product to be shipped In lot to the buyers before the whole product production is not completed yet. Each product lot is dispatched to the associated buyer In a number or shipments. The buyers consume their products at fixed rates. The objective is to the production and shipment schedules in the Integrated system. which minimizes the mean total annual cost per unit time. The mean total annual cost consists or production setup cost inventory holding cost and shipment cost. For the model, an Iterative optimal solution procedure with shipment consolidation policy incorporated is derived. It is then tested through numerical experiments to show how efficient and effective He shipment consolidation policy is.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.46 no.4
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• pp.93-100
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• 2023

In this paper, an alternative inventory policy that trades off the bullwhip effect at an upstream facility with cost minimization at a current facility, with the goal of reducing system wide total expected inventory costs, when external demand distributjon is autocorrelated, is considered. The alternative inventory policy has a form that is somewhere between one that completely neglects the autocorrleation and one that actively utilizes the autocorrelation. For this purpose, a mathematical model that allows us to evaluate system wide total expected inventory costs for a periodic review system is developed. This model enables us to identify an optimal inventory policy at a current facility that minimizes system wide total expected inventory costs by the best tradeoff of the bullwhip effect at an upstream facility with cost minimization at a current facility. From numerical experiments, it has been found that (i) when the autocorrelation is negative, the optimal policy is one that actively utilizes the autocorrelation, (ii) when the autocorrelation is small and positive, the optimal policy is one that neglects the autocorrelation, and (iii) when the autocorrelation is large and positive, the optimal policy is somewhere between one that actively utilizes the autocorrelation and one that neglect the autocorrelation.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.39 no.4
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• pp.7-14
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• 2016

Unlike most researches that focus on single manufacturer or single buyer, this research studies the cooperation policy for two participants of supply chain such as single vendor and single buyer. Especially, this paper deals with single vendor-single buyer integrated-production inventory problem. If the buyer orders products, then the vendor will start to make products and then the products will be shipped from the vendor to the buyer many times. The buyer is supposed to order again when the buyer's inventory level hits reorder point during the last shipment and this cycle keeps repeated. The buyer uses continuous review inventory policy and customer's demand is assumed to be probabilistic. The contribution of this paper is to present a mixed approach and derive its cost function. The existing policy assumes that the size of shipping batch from single vendor to single buyer is increasing, called Type 1, or constant, called Type 2. In mixed approach, the size of shipping batch is increasing at the beginning part of the cycle, and then its size is constant at the ending part of the cycle. The number of shipping for Type 1 and Type 2 in a cycle in mixed approach is determined to minimize total cost. The relationship between parameters, for example, the holding cost per product, the set up cost per order, and the shortage cost per item and decision variables such as order quantity, safety factor, the number of shipments, and shipment increasing factor is figured out via sensitivity analysis. Finally, it is statistically proved that the mixed approach is superior to the existing approaches.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2006.11a
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• pp.327-331
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• 2006

This paper considers an integrated inventory-distribution system with a fleet of heterogeneous vehicles employed where a single warehouse distributes a single type of products to many spatially distributed retailers to satisfy their dynamic demands and the product is provided to the warehouse via procurement ordering from any manufacturing plant or market The Problem is formulated as an Mixed Integer Programming with the objective function of minimizing the sum of inventory holding cost (at the warehouse and retailers), and transportation cost and procurement ordering cost at the warehouse, subject to inventory-balancing constraints, ordering constraints, vehicle capacity constraints and transportation time constraints. The problem is Proven to be NP-hard. Accordingly, a Lagrangean heuristic procedure is derived and tested for its effectiveness through computational experiments with some numerical instances.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2003.05a
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• pp.8-13
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• 2003

This paper considers a continuous-review two-echelon inventory control problem with one-to-one replenishment policy incorporated and with lost sales allowed where demand arrives In a stationary Poisson process The problem Is formulated using METRIC-approximation in a combined approach of pricing and (S-1.S) Inventory policy, for which an iterative solution algorithm is derived with respect to the corresponding one-warehouse multi-retailor supply chain. Specifically, decisions on retail pricing and warehouse inventory policies are made in integration to maximize total profit in the supply chain. The objective function of the model consists of sub-functions of revenue and cost (holding cost and penalty cost). To test the effectiveness and efficiency of the proposed algorithm, numerical experiments are performed The computational results show that the proposed algorithm is efficient and derives quite good decisions

• Management Science and Financial Engineering
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• v.17 no.2
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• pp.1-21
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• 2011

This paper considers an integrated inventory-distribution system with a fleet of heterogeneous vehicles employed where a single warehouse distributes a single type of products to many spatially distributed retailers to satisfy their dynamic demands. The problem is to determine order planning at the warehouse, and also vehicle schedules and delivery quantities for the retailers with the objective of minimizing the sum of ordering cost at the warehouse, inventory holding cost at both the warehouse and retailers, and transportation cost. For the problem, we give a Mixed Integer Programming formulation and develop a Lagrangean heuristic procedure for computing lower and upper bounds on the optimal solution value. The Lagrangean dual problem of finding the best Lagrangrean lower bound is solved by subgradient optimization. Computational experiments on randomly generated test problems showed that the suggested algorithm gives relatively good solutions in a reasonable amount of computation time.