Inventory Control and Delivery Time Quotation for Assembly Supply Chains
Operations Research · 2018 · Volume 66 · Issue 4
Abstract
We study an inventory system involving a contractor, who provides quotations of delivery times to customers, and suppliers, who stock prefabricated modules that the contractor will use to complete orders. The customers’ decisions on whether to wait or leave depend on the quotations. This is an assembly system with partial lost sales, where the interaction between the quotation policy and the inventory policy is complicated. We consider either a uniform or an adaptive quotation policy and either an independent or a modified S policy to control the inventory. Under the independent S policy, we show that the multiple-supplier system can be converted into a one-supplier system, which enables us to devise an efficient simulation algorithm to identify the optimal parameters of this policy. Under the modified S policy, the suppliers can be rearranged into a serial system, but given the tedious computational nature of the modified S policy, we propose a dynamic programming–based heuristic, which is efficient and accurate, to identify the optimal parameters of this policy. Finally, we consider the decentralized setting, for which we propose a coordination mechanism that requires the contractor to impose a penalty for the suppliers’ stockouts and to provide a subsidy for the suppliers’ inventory. The online appendix is available at https://doi.org/10.1287/opre.2017.1704 .
Keywords
inventory/production, multi-item/echelon/stage, operating characteristics
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