• Industrial Engineering and Management Systems
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• v.8 no.2
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• pp.72-79
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• 2009

The ultimate goal of inventory management is to decide the timing and the quantity of ordering in response to uncertain demands. Recently, some researchers have focused upon an impact of distortions in the information, e.g., customer order cancellation, on an economical inventory policy. The customer order cancellation is considered a kind of distortions in demands, because a demand that is eventually cancelled is equivalent to a phony demand. Also, there are some additional distortions in the inventory information. For instance, the procurement of suppliers may include some nonconforming items as a result of imperfect production and inspection by the suppliers, and/or damage in transit. The nonconforming item should be considered a kind of distortions in the inventory information, because the nonconforming item is equivalent to a phony stock. In this article, we consider an inventory model under the situation that customers can cancel their orders and the procurement of suppliers may include some nonconforming items. Then, we introduce the customer order reservation into the inventory model for the purpose of avoiding the costly backlogs, because the customer order reservation gives retailers a period to fulfill customer's requests. We formulate a periodic review (s, S) inventory model and investigate the economical operation under the situation mentioned above. Further, through the sensitivity analysis, we show the impact of these distortions and the effect of the customer order reservation on the inventory policy.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.43 no.1
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• pp.70-78
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• 2020

Under the situation which customer orders are cancelled unless all products in the order are delivered all at once, this paper concentrates on the purchase dependent demands and explores the systematic approach to implant the purchase dependence into the multi-product inventory model. First, by acknowledging that it is a challenging task to formulate a suitable inventory model for the purchase dependence, we derive the optimal solution condition using an EOQ model and extend the optimal solution condition to periodic review models. Then, through the comparison simulation of four inventory policies regarding several degrees of purchase dependence, we demonstrate that the inventory models which consider the purchase dependence generate less total cost than the inventory models which ignore the purchase dependence. In general, the inventory models which consider the purchase dependence reduce the loss of sales by maintaining more inventories, which results in reducing the total cost. Consequently, the simulation result supports the effectiveness of this paper's approach. In addition, this paper uses the individual order period and joint order period obtained from the EOQ model for the multi-product inventory model. Through the in-depth analysis of comparing the two models, we observe that the model of using the joint order period produces less total cost when the degree of purchase dependence is high, but the model of using the individual order period produces less total cost when the degree of purchase dependence is low.

• Journal of the Korean Operations Research and Management Science Society
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• v.36 no.3
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• pp.61-74
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• 2011

The objective of this study is to evaluate the effects of sharing uncertain yield information with a downstream supply chain player. We are interested in understanding how the amount of yield uncertainty affects the supply-side benefits and/or costs, which has not been considered in the literature, in addition to the customer-side benefits. With that purpose, this work evaluates a supplier who provides yield information in comparison with another supplier who shares no information. We simulate an order-up-to type heuristic policy that is adapted from the literature and reasonably modified to represent yield information sharing with error. From the simulation study, we argue that the customer would experience cost reduction, but the cost for supplier's inventory is increasing when sharing yield information. Furthermore, the amount of benefits and costs are situational and affected by level of yield uncertainty and demand variance. Based on the simulation study, we finally make several recommendations for the supply-side approaches to yield information sharing.

• Journal of the Korea Society of Computer and Information
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• v.12 no.5
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• pp.273-284
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• 2007

This paper studies a periodic review inventory model with an e-MarketPlace transaction in reconfigurable manufacturing system(RMS). A decision maker can expand/reduce production capacity/quantities and/or replenish/dispose inventories from/to e-MarketPlace urgently to satisfy the stochastic demands. If inventories are replenished or disposed through e-MarketPlace, this leadtime is shorter than the production leadtime, but unit purchasing or selling cost is more expensive than that of expanding capacity or reducing production quantities respectively. Henceforth, trade-off on these alternatives is considered. In addition to this, in order to consider the economy of scale, our model includes the fixed cost for purchasing from e-MarketPlace and capacity expansion. We use dynamic programming and K convexity methods to characterize the nature of the optimal policy. Finally, We present the optimal inventory control policy which is composed by the combinations of a base stock and (s,S) type policy.