Browsing by Subject "Inventories Management."

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Open Access
Analysis of consignment contracts for spare parts inventory systems
(2006) Latifoğlu, Çağrı
We study a Vendor Managed Inventory (VMI) partnership between a manufacturer and a retailer. More specifically, we consider a consignment contract, under which the manufacturer assumes the ownership of the inventory in retailer’s premises until the goods are sold, the retailer pays an annual fee to the manufacturer and the manufacturer pays the retailer backorder penalties. The main motivation of this research is our experience with a capital equipment manufacturer that manages the spare parts (for its systems) inventory of its customers in their stock rooms. We consider three factors that may potentially improve the supply chain efficiency under such a partnership: i-) reduction in inventory ownership costs (per unit holding cost) ii-) reduction in replenishment lead time and iii-) joint replenishment of multiple retailer installations. We consider two cases. In the first case, there are no setup costs; the retailer (before the contract) and the manufacturer (after the contract) both manage the stock following an (S − 1, S) policy. In the second case, there are setup costs; the retailer manages its inventories independently following an (r, Q) policy before the contract, and the manufacturer manages inventories of multiple retailer installations jointly following a (Q, S) policy. Through an extensive numerical study, we investigate the impact of the physical improvements above and the backorder penalties charged by the retailer on the total cost and the efficiency of the supply chain.
Open Access
Integrated flexible capacity and inventory management under flexible capacity uncertainty
(2006) Paç, Mehmet Fazıl
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 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.
Open Access
Replenishment decisions under quantity discounts and expiry dates
(2006) Ergene, Erim
In this study, we model a single buyer-single seller system under a quantity discount schedule with expiry dates. The buyer faces constant demand and shortages are not allowed. The seller o§ers a quantity discount which is e§ective on the buyerís next purchase to be exercised by a certain expiry date given that the current purchase exceeds a minimum quantity. We derive the optimal replenishment policy structure for the buyer which minimizes his/her total cost rate. We obtain the expressions for the operating characteristics of the buyer and investigate the structural properties of the objective function. Under a speciÖc inventory holding cost structure, we also investigate the impact of the buyerís decisions on the entire buyer-seller inventory system. We conduct an extensive numerical study. Our Öndings show that quantity discount schedules with expiry dates may be beneÖcial for both the buyer and the seller in a variety of operating cost settings.