• Journal of the Korean Operations Research and Management Science Society
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• v.30 no.4
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• pp.71-81
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• 2005

This Paper focuses on the effects of outside competition on an optimal echelon base stock level in a two stage supply chain. This is new in that we have been studying the effects of inside competition within a supply chain up to now. It is known that the optimal echelon base stock level with inside competition within a supply chain is less than the global optimal echelon base stock level without inside competition. This is due to the ' public goods ' nature of inventory. That is, more inventory is better, but one wants the other to invest more, thus resulting in under-investment. However, this phenomenon becomes weaker as outside competition increases. We show that as outside competition becomes stronger, the ' public goods ' effects decrease and the optimal echelon base stock level increases. If the level of competition is sufficiently high, the optimal echelon base stock level goes even higher than the global optimal echelon base stock level. We develop a theoretical model for the analysis and conduct a numerical analysis.

• Korean Journal of Construction Engineering and Management
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• v.9 no.1
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• pp.187-198
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• 2008

There are usually plenty of material inventories in a construction site. More inventories can meet unexpected demands, and also they may have an economical advantage by avoiding a probable escalation of raw material costs. On the other hand, these inventories also cause negative aspects to increase costs for storing redundant inventory as well as decreasing construction productivity. Therefore, a proper method of deciding an optimal level of material inventories while considering dynamic variations of resources under uncertainty is very crucial for the economical efficiency of construction projects. This research presents a stochastic modelling method for construction operations, particularly targeting a work process involving on-site fabrication of raw materials like iron-rebar process (delivery, cut and assembly, and placement). To develop the model, we apply the concept of factory physics to depict the overall components of a system. Then, an optimal inventory management model is devised to support purchase decisions where users can make timely actions on how much to order and when to buy raw materials. Also, optimal time lag, which minimizes the storage time for pre-assembled materials, is obtained. To verify this method, a real case is applied to elicit an optimal amount of inventory and time lag. It is found that average values as well as variability of inventory level decreased significantly so as to minimize economic costs related to inventory management under uncertain project condition.

• Korean Management Science Review
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• v.25 no.1
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• pp.107-121
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• 2008

As to more efficiently manage the inventory in the retail supply chain and to meet the customer demand in a timely manner, vendor-managed inventory (VMI) has been widely accepted, which manages inventory in the retail supply chain via sharing information and collaborating with the retailers. Applying VMI generates vendor-managed inventory/distribution problem (VMIDP), which involves inventory management for both the vendor and the retailers, and the design of vehicle routes for delivery, to minimize the total operating cost in the supply chain. In this paper, we suggest a mixed integer programming (MIP) model to obtain the optimal solution for VMIDP in a two-echelon retail supply chain, and develop an efficient heuristic based on the operating principles of the MIP model. To evaluate the performance of the heuristic, its solution was compared with the one of the MIP model on a total of twenty seven test problems. As a result, the heuristic found optimal solutions on seven problems in a significantly reduced time, and generated a 4.3% error rate of total cost in average for all problems. The heuristic is applied to the case problem of the local famous franchise company together with GIS, showing that it is capable of providing a solution efficiently in a relatively short time even in the real world situation.

• Journal of the Korean Operations Research and Management Science Society
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• v.11 no.1
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• pp.44-50
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• 1986

In this paper, we find optimal policy for the (Q, r) inventory model under the lead time uncertainty. The (Q, r) inventory model is such that the fixed order quantity Q is placed whenever the level of on hand stock reaches the reorder point r. We first develop the single level inventory model as the basis for the analysis multi-level distribution systems. The functional problem is to determine when and how much to order in order to minimize the expected total cost per unit time, which includes the set up, inventory holding and inventory shortage cost. The model, then, is extended to the multi-level distribution system consisting of the factory, warehouses and retailers. In this case, we also find an optimal policy which minimizes the total cost of the contralized multi-level distribution system.

• Journal of Digital Convergence
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• v.11 no.12
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• pp.265-274
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• 2013

The business cycle during a recession leads to negative effects on raising funds and operations management of company. In particular, the company with many inventories in the recession causes liquidity problem. Which leads to frustration in the competitive strategy management. In this case the company experiencing cash or liquidity problems attempts to reduce its investment in inventory. However, reducing inventory investment makes problems to increase inventory operating costs. This paper presents sensitivity of total cost compared to the size for reducing inventory investment. This will guarantee the relevance of the reducing inventory investment. Optimal Inventory levels also may be required to be less than the optimal levels without reduction on inventory investments.

• Journal of Korean Institute of Industrial Engineers
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• v.33 no.3
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• pp.312-321
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• 2007

We address a disposal issue of returned products in a product recovery system where a single product is stocked in order to meet a demand from customers who may return products after usage. Product returns occur randomly and can be accepted for remanufacturing or disposed of depending on the state of the system. We examine the structure of the optimal disposal policy for returned product that utilizes the information of the inventory of both serviceable and remanufacturable products. Numerical study indicates that it can be characterized by a monotonic threshold type of the curve. A disposal is allowed only when the remanufacturable inventory level exceeds a threshold which is the function of the inventory level of serviceable product and it is decreasing as the serviceable inventory level increases. Sensitivity analysis also indicates that the optimal disposal policy and the optimal profit have monotonic properties with respect to system parameters.

• Industrial Engineering and Management Systems
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• v.4 no.2
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• pp.145-157
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• 2005

There are a lot of raw materials, work-in-processes and finished goods in manufacturing industry. Here, the less stock of materials and work-in-processes manufacturing industry has, the worse the rate of the production is. Inversely, the more manufacturing industry has, the more expensive the cost to support them is. Thus, it is important for us to balance them efficiently. In general, inventory problems are to decide appropriate times to produce goods and to determine appropriate quantities of goods. Therefore, inventory problems require as more useful information as possible. For example, there are demand, lead time, ordering point and so on. In this paper, we deal with an optimal ordering policy on both way substitutable two-commodity inventory control system. That is, there is a problem of how to allocate the produced two kinds of goods in a factory to m areas so as to minimize the total expected inventory cost. The demand of each area is probabilistic, and we adopt the exponential distribution as a probability density function of demand. Moreover, we provide numerical examples of the problem.

• Journal of the Korean Operations Research and Management Science Society
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• v.30 no.2
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• pp.117-129
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• 2005

This paper considers a make-to-order inventory-production system in which customer orders are admitted only when the number of outstanding customer orders is below a value committed by the system. We deal with general distributions for the customer order Inter-arrival, production, and replenishment lead time processes. Monotonicities of the optimal average cost with respect to these distribution parameters are established using sample path coupling arguments. When distributions are given as an exponential one, we implement a sensitivity analysis on the optimal inventory policy and show that it has monotonicities with respect to system costs using dynamic programming.

• Journal of the Korean Operations Research and Management Science Society
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• v.4 no.1
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• pp.25-31
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• 1979

We consider the optimal ordering policy for a single-product two-stage inventory system where the main assumptions are as follows: (i) constant continuous demand only at stage 2, (ii) constant input (production) rate at stage 1, (iii) instantaneous delivery (transportation) from stage 1 to stage 2, (iv) backlogging is allowed only at stage 2, (v) an infinite planning horizon. Costs considered are ordering and linear holding costs at both stages, and linear shortage cost only at stages 2. By solving 9 different case problems, we have observed the general from of the optimal ordering policies for our model which minimizes the total cost per unit time. It is noticeable from this observation that the questionable but more often than not adopted assumption by many authors in determining the optimal potimal policy for multistage inventory systems, that the ordering (lot) sizes at each stage remain constant thruout the planning horizon, is not valid.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2006.11a
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• pp.142-146
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• 2006

This paper considers a SCM issue concerned with an integrated problem of inventory control and dynamic pricing strategies when demands are price and time dependent. The associated price markdowns are conducted for inventory control in a two-layer market consisting of retailer and outlet as in fashion apparel market. The objective function consists of revenue terms (sales revenue and salvage value) and purchasing cost term. Specifically, decisions on price markdowns and order quantity are made to maximize total profit in the supply chain so as to have zero inventory level at the end of the sales horizon. To solve the proposed problem, a gradient method is applied, which shows an optimal decision on both the initial inventory level and the discount pricing policy. Sensitivity analysis is conducted on the demand parameters and the final comments on the practical use of the proposed model are presented.