Browsing by Subject "Inventory"
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Item Open Access A replenishment policy for perishable items with cold chain transportation and lead time reduction options(Bilkent University, 2023-07) Bayır, AtahanPerishability relates to products that have limited shelf life and are prone to spoilage, decay, or becoming unsafe for use over time. Although perishability is a common aspect in several product categories such as fresh produce, pharmaceuticals, blood product and fashion industry, many inventory models assume that products have an infinite shelf life. In this work, we introduce a novel approach that integrates inventory replenishment and cold chain technology decisions to replenishment policy of inventories with the aim of better preserving the effective shelf life of products. We focus on a single product, single location, continuous review inventory model with positive lead time, where products have fixed lifetimes. Demand arrivals are assumed to follow a Poisson process. If there are two batches in stock, items in the old batch is disposed with a salvage value. We assume that a cold chain technology is available to maintain the items in a preservative environment, protecting them against temperature and moisture during lead time, thereby providing an extended shelf life when the items arrive in the inventory. In particular, we adopt a modified lot size/reorder point (Q,r) policy that allows for a cold chain technology. The model also allows for a scenario where lead time is reduced through expedited transportation, which directly increases shelf life of arriving batch while decreases the time spent during transportation. The objective is to minimize the expected cost per unit time over an infinite horizon the decision variables of order quantity, reorder level, and cold chain technology level. A numerical study is provided to demonstrate the model performance, its sensitivity to system parameters and to compare all the policies we present.Item Open Access Age-based vs. stock level control policies for a perishable inventory system(2001) Tekin, E.; Gürler Ü.; Berk, E.In this study, we investigate the impact of modified lotsize-reorder control policy for perishables which bases replenishment decisions on both the inventory level and the remaining lifetimes of items in stock. We derive the expressions for the key operating characteristics of a lost sales perishable inventory model, operating under the proposed age-based policy, and examine the sensitivity of the optimal policy parameters with respect to various system parameters. We compare the performance of the suggested policy to that of the classical (Q,r) type policy through a numerical study over a wide range of system parameters. Our findings indicate that the age-based policy is superior to the stock level policy for slow moving perishable inventory systems with high service levels.Item Open Access Analysis of the (Q, r) inventory model for perishables with positive lead times and lost sales(Institute for Operations Research and the Management Sciences (INFORMS), 2008) Berk, E.; Gürler, Ü.We consider a perishable inventory system with Poisson demands, fixed shelf lives, constant lead times, and lost sales in the presence of nonnegligible fixed ordering costs. The inventory control policy employed is the continuous-review (Q, r) policy, where r < Q. The system is modeled using an embedded Markov process approach by introducing the concept of the effective shelf life of a batch in use. Using the stationary distribution of the effective shelf life, we obtain the expressions for the operating characteristics and construct the expected cost rate function for the inventory system. Our numerical study indicates that the determination of the policy parameters exactly as modeled herein results in significant improvements in cost rates with respect to a previously proposed heuristic. We also compare the (Q, r) policy with respect to a time-based benchmark policy and find that the (Q, r) policy might be impractical for rare events, but overall appears to be a good heuristic policy.Item Open Access Bayesian demand updating in lost sales newsvendor: a two moment approximation(Elsevier, 2007-10) Berk, E.; Gürler, Ü.; Levine, R. A.We consider Bayesian updating of demand in a lost sales newsvendor model with censored observations. In a lost sales environment, where the arrival process is not recorded, the exact demand is not observed if it exceeds the beginning stock level, resulting in censored observations. Adopting a Bayesian approach for updating the demand distribution, we develop expressions for the exact posteriors starting with conjugate priors, for negative binomial, gamma, Poisson and normal distributions. Having shown that non-informative priors result in degenerate predictive densities except for negative binomial demand, we propose an approximation within the conjugate family by matching the first two moments of the posterior distribution. The conjugacy property of the priors also ensure analytical tractability and ease of computation in successive updates. In our numerical study, we show that the posteriors and the predictive demand distributions obtained exactly and with the approximation are very close to each other, and that the approximation works very well from both probabilistic and operational perspectives in a sequential updating setting as well.Item Open Access Can accessing much data reshape the theory? Inventory theory under the challenge of data-driven systems(Elsevier, 2022-08-24) Erkip, Nesim KohenIn this review, we discuss the data-driven systems and their effects on the implementation of the inventory theory. After overviewing the theory briefly, we group the data-driven approaches to simplify exposition. We consider the use of available data to estimate the parameters of more complex models, and propose developing the theory in that direction, as well. As a pedagogical example, an extension of the standard EOQ model with heterogenous customers is presented. The review proposes a research agenda for inventory problems and concludes with discussing challenges for the future.Item Open Access Continuous time control of make-to-stock production systems(Bilkent University, 2010) Bulut, ÖnderWe consider the problem of production control and stock rationing in a make-tostock production system with multiple servers –parallel production channels--, and several customer classes that generate independent Poisson demands. At decision epochs, in conjunction with the stock allocation decision, the control specifies whether to increase the number of operational servers or not. Previously placed production orders cannot be cancelled. We both study the cases of exponential and Erlangian processing times and model the respective systems as M /M /s and M /Ek /s make-to-stock queues. We characterize properties of the optimal cost function, and of the optimal production and rationing policies. We show that the optimal production policy is a state-dependent base-stock policy, and the optimal rationing policy is of state-dependent threshold type. For the M /M /s model, we also prove that the optimal ordering policy transforms into a bang-bang type policy when we relax the model by allowing order cancellations. Another model with partial ordercancellation flexibility is provided to fill the gap between the no-flexibility and the full-flexibility models. Furthermore, we propose a dynamic rationing policy for the systems with uncapacitated replenishment channels, i.e., exogenous supply systems. Such systems can be modeled by letting s --the number of replenishment channels-- go to infinity. The proposed policy utilizes the information on the status of the outstanding replenishment orders. This work constitutes a significant extension of the literature in the area of control of make-to-stock queues, which considers only a single server. We consider an arbitrary number of servers that makes it possible to cover the spectrum of the cases from the single server to the infinite servers. Hence, our work achieves to analyze both the exogenous and endogenous supply leadtimes.Item Open Access Coordinated inventory replenishment and outsourced transportation operatoins(Elsevier, 2014-10) Gürler, Ü.; Alp, O.; Büyükkaramikli, N. C.We consider a one-warehouse N retailers supply chain with stochastic demand. Inventory is managed in-house whereas transportation is outsourced to a 3PL provider. We develop analytical expressions for the operating characteristics under both periodic and continuous joint replenishment policies. We identify the settings where a periodic review policy is comparable to a continuous review one. In our numerical test-bed, the periodic policy performed best in larger supply chains operating with larger trucks. We also observed that if the excess utilization charge is less than 25%, outsourcing becomes beneficial even if outsourcing cost is 25% more than the in-house fleet costs.Item Open Access Coordinated logistics: replenishment with capacitated transportation for a supply chain(POMS, 2014-01) Büyükkaramikli, N. C.; Gürler, Ü.; Alp, O.In this study, we consider the integrated inventory replenishment and transportation operations in a supply chain where the orders placed by the downstream retailer are dispatched by the upstream warehouse via an in-house fleet of limited size. We first consider the single-item single-echelon case where the retailer operates with a quantity based replenishment policy, (r,Q), and the warehouse is an ample supplier. We model the transportation operations as a queueing system and derive the operating characteristics of the system in exact terms. We extend this basic model to a two-echelon supply chain where the warehouse employs a base-stock policy. The departure process of the warehouse is characterized in distribution, which is then approximated by an Erlang arrival process by matching the first two moments for the analysis of the transportation queueing system. The operating characteristics and the expected cost rate are derived. An extension of this system to multiple retailers is also discussed. Numerical results are presented to illustrate the performance and the sensitivity of the models and the value of coordinating inventory and transportation operations.Item Open Access Dahili imalat parça yöntemi: Evinde üret, sistemli yönet(TMMOB Makina Mühendisleri Odası, 2005) Dalokay, Can; Ertürk, Gonca; Kaçar, İlkay Sarp; Ünlüönen, Onur; Yazıcı, Gizem; Alp, OsmanMAN Türkiye A.Ş. fabrikası bünyesindeki dahili imalat birimi, montaj hatlarında kullanılmak üzere birçok parça üretmektedir. Üretilen dahili imalat parçaları, montaj hattına girmeden önce ambarlarda stoklanmaktadır. Bu parçalara ihtiyaç duyulduğu anda, parçalar görevliler tarafından ambarlardan alınıp ilgili montaj hattına sunulmaktadır. Bu proje kapsamında, dahili imalat parçalarının yönetimine yönelik üç alt problem çözülmüştür: (i) envanter kontrol politikalarının belirlenmesi, (ii) depo yerleşim planlarının belirlenmesi, ve (iii) bazı parçaların hareketleri için Kanban stratejisinin uygulanması. Gerçekleşmiş kullanım verileri ile yapılan benzetim koşumları sonucunda, önerilen çözüm yöntemlerinin sistem performansına iyileştirdiği gösterilmiştir. Önerilen stok kontrol modelinin çözümü, belirli aralıklarda güncel veriler ile koşturulabilecek ve fabrikadaki mevcut ERP sistemi ile uyumlu olan bir yazılım ile sağlanmştır.Item Open Access Design and analysis of mechanisms for decentralized joint replenishment(Elsevier B.V., 2017) Güler, K.; Körpeoğlu, E.; Şen, A.We consider jointly replenishing multiple firms that operate under an EOQ like environment in a decentralized, non-cooperative setting. Each firm's demand rate and inventory holding cost rate are private information. We are interested in finding a mechanism that would determine the joint replenishment frequency and allocate the joint ordering costs to these firms based on their reported stand-alone replenishment frequencies (if they were to order independently). We first provide an impossibility result showing that there is no direct mechanism that simultaneously achieves efficiency, incentive compatibility, individual rationality and budget-balance. We then propose a general, two-parameter mechanism in which one parameter is used to determine the joint replenishment frequency, another is used to allocate the order costs based on firms’ reports. We show that efficiency cannot be achieved in this two-parameter mechanism unless the parameter governing the cost allocation is zero. When the two parameters are same (a single parameter mechanism), we find the equilibrium share levels and corresponding total cost. We finally investigate the effect of this parameter on equilibrium behavior. We show that properly adjusting this parameter leads to mechanisms that are better than other mechanisms suggested earlier in the literature in terms of fairness and efficiency. © 2016 Elsevier B.V.Item Open Access The effect of continuous price change in the EOQ(Pergamon Press, 1992) Erel, E.The sensitivity of the basic economic order quantity (EOQ) model to continuous purchase price changes is explored. The phenomenon of continuous price changes exists in several countries and it is not likely to improve. The paper shows that using the conventional EOQ can be quite costly and far from optimal, if the holding cost rate is determined erroneously by ignoring the price change.Item Open Access An integrated approach to inventory and flexible capacity management subject to fixed costs and non-stationary stochastic demand(Springer, 2009) Tan, T.; Alp O.In a manufacturing system with flexible capacity, inventory management can be coupled with capacity management in order to handle fluctuations in demand more effectively. Typical examples include the effective use of temporary workforce and overtime production. In this paper, we discuss an integrated model for inventory and flexible capacity management under non-stationary stochastic demand with the possibility of positive fixed costs, both for initiating production and for using contingent capacity. We analyze the characteristics of the optimal policies for the integrated problem. We also evaluate the value of utilizing flexible capacity under different settings, which enable us to develop managerial insights. © 2008 The Author(s).Item Open Access Integrated capacity and inventory management with capacity acquisition lead times(Elsevier, 2009-08-01) Mincsovicz, G.; Tan, T.; Alp, O.We model a make-to-stock production system that utilizes permanent and contingent capacity to meet non-stationary stochastic demand, where a constant lead time is associated with the acquisition of contingent capacity. We determine the structure of the optimal solution concerning both the operational decisions of integrated inventory and flexible capacity management, and the tactical decision of determining the optimal permanent capacity level. Furthermore, we show that the inventory (either before or after production), the pipeline contingent capacity, the contingent capacity to be ordered, and the permanent capacity are economic substitutes. We also show that the stochastic demand variable and the optimal contingent capacity acquisition decisions are economic complements. Finally, we perform numerical experiments to evaluate the value of utilizing contingent capacity and to study the effects of capacity acquisition lead time, providing useful managerial insights.Item Open Access Integrated flexible capacity and inventory management under flexible capacity uncertainty(Bilkent University, 2006) Paç, Mehmet FazılIn a manufacturing environment with volatile demand, inventory management can be coupled with dynamic capacity adjustments for handling the fluctuations more effectively. In this study we consider the integrated management of inventory and flexible capacity management under seasonal stochastic demand and uncertain labor supply. The capacity planning problem is investigated from the workforce planning perspective. We consider a manufacturing firm that can temporarily increase its production capacity by utilizing contingent workers from an external labor supply agency. The uncertainty of contingent capacity arises from the (un)availability of contingent workers, the pool size and the behavior of the labor supply agency. Using a dynamic programming approach, we formulate an infinite horizon model determining the optimal levels of permanent and contracted capacity, in order to minimize the total cost of operations. Within the dynamic program, we determine the optimal operational capacity decisions, namely the size of contracted and contingent capacity to be utilized in each period. The characteristics of the optimal policies are analyzed under an infinite horizon setting. In addition we consider temporary labor contracts, that diminish the effects of supply uncertainty on the manufacturer, at a specific contracting cost. Our analysis shows that as the supply uncertainty and/or the expected cost of utilizing contingent workers increase, the value of temporary labor contracts also increase. In contrast increasing demand variability reduces the incentive of the manufacturer to own capacity and increases the utilization of contingent resources.Item Open Access Integrated workforce capacity and inventory management under labour supply uncertainty(Taylor & Francis, 2009) Pac, M. F.; Alp, O.; Tan, T.In a manufacturing environment with volatile demand, inventory management can be coupled with dynamic capacity adjustments for handling the fluctuations more effectively. In this study, we consider the problem of integrated capacity and inventory management under non-stationary stochastic demand and capacity uncertainty. The capacity planning problem is investigated from the workforce planning perspective where the capacity can be temporarily increased by utilising contingent workers from an external labour supply agency. The contingent capacity received from the agency is subject to an uncertainty, but the supply of a certain number of workers can be guaranteed through contracts. There may also be uncertainty in the availability of the permanent and contracted workers due to factors such as absenteeism and fatigue. We formulate a dynamic programming model to make the optimal capacity decisions at a tactical level (permanent workforce size and contracted number of workers) as well as the operational level (number of workers to be requested from the external labour supply agency in each period), integrated with the optimal operational decision of how much to produce in each period. We analyse the characteristics of the optimal policies and we conduct an extensive numerical analysis that helps us provide several managerial insights.Item Open Access Inventory and pricing decisions in a single-period problem involving risky supply(Elsevier, 2008-11) Serel, D. A.We explore an extension of the single-period (newsboy) inventory problem when supply is uncertain. We look into the negotiations between a newsvendor (retailer) and a manufacturer when there is competition from a second supplier. There is a chance that the second supplier will not be able to deliver the product. The retailer can maximize his expected profit by optimally allocating his order between the two suppliers. The retailer’s ordering problem is analyzed in conjunction with the manufacturer’s related pricing problem. The effects of demand and supply uncertainties on the optimal decisions of the parties are explored using numerical examples. We also explore extension of the retailer’s problem to the cases of order cancellation, price-dependent demand, and demand-dependent supply availability.Item Open Access An inventory problem with two randomly available suppliers(Institute for Operations Research and the Management Sciences, 1997) Gürler, Ü.; Parlar, M.This paper considers a stochastic inventory model in which supply availability is subject to random fluctuations that may arise due to machine breakdowns, strikes, embargoes, etc. It is assumed that the inventory manager deals with two suppliers who may be either individually ON (available) or OFF (unavailable). Each supplier's availability is modeled as a semi-Markov (alternating renewal) process. We assume that the durations of the ON periods for the two suppliers are distributed as Erlang random variables. The OFF periods for each supplier have a general distribution. In analogy with queuing notation, we call this an Es1[Es2]/G1[G2] system. Since the resulting stochastic process is non-Markovian, we employ the "method of stages" to transform the process into a Markovian one, albeit at the cost of enlarging the state space. We identify the regenerative cycles of the inventory level process and use the renewal reward theorem to form the long-run average cost objective function. Finite time transition functions for the semi-Markov process are computed numerically using a direct method of solving a system of integral equations representing these functions. A detailed numerical example is presented for the E2[E2]/M[M] case. Analytic solutions are obtained for the particular case of "large" (asymptotic) order quantity, in which case the objective function assumes a very simple form that can be used to analyze the optimality conditions. The paper concludes with the discussion of an alternative inventory policy for modeling the random supply availability problem.Item Open Access Multi-item quick response system with budget constraint(2012) Serel, D. A.Quick response mechanisms based on effective use of up-to-date demand information help retailers to reduce their inventory management costs. We formulate a single-period inventory model for multiple products with dependent (multivariate normal) demand distributions and a given overall procurement budget. After placing orders based on an initial demand forecast, new market information is gathered and demand forecast is updated. Using this more accurate second forecast, the retailer decides the total stocking level for the selling season. The second order is based on an improved demand forecast, but it also involves a higher unit supply cost. To determine the optimal ordering policy, we use a computational procedure that entails solving capacitated multi-item newsboy problems embedded within a dynamic programming model. Various numerical examples illustrate the effects of demand variability and financial constraint on the optimal policy. It is found that existence of a budget constraint may lead to an increase in the initial order size. It is also observed that as the budget available decreases, the products with more predictable demand make up a larger share of the procurement expenditure.Item Open Access Multicriteria inventory classification using a genetic algorithm(Elsevier, 1998) Guvenir, H. A.; Erel, E.One of the application areas of genetic algorithms is parameter optimization. This paper addresses the problem of optimizing a set of parameters that represent the weights of criteria, where the sum of all weights is 1. A chromosome represents the values of the weights, possibly along with some cut-off points. A new crossover operation, called continuous uniform crossover, is proposed, such that it produces valid chromosomes given that the parent chromosomes are valid. The new crossover technique is applied to the problem of multicriteria inventory classification. The results are compared with the classical inventory classification technique using the Analytical Hierarchy Process. © 1998 Elsevier Science B.V.Item Open Access Near-optimal modified base stock policies for the capacitated inventory problem with stochastic demand and fixed cost(World Scientific Publishing, 2014) Özener, O. Ö.; Güllü, R.; Erkip, N.In this study, we investigate a single-item, periodic-review inventory problem where the production capacity is limited and unmet demand is backordered. We assume that customer demand in each period is a stationary, discrete random variable. Linear holding and backorder cost are charged per unit at the end of a period. In addition to the variable cost charged per unit ordered, a positive fixed ordering cost is incurred with each order given. The optimization criterion is the minimization of the expected cost per period over a planning horizon. We investigate the infinite horizon problem by modeling the problem as a discrete-time Markov chain. We propose a heuristic for the problem based on a particular solution of this stationary model, and conduct a computational study on a set of instances, providing insight on the performance of the heuristic.