In the past few years, increasing numbers of automatic warehousing systems using computer-controlled stacker cranes have been installed. Our research concerns the scientific scheduling and design of these systems. There are three elements to scheduling: the assignment of multiple items to the same pallet (Pallet Assignment); the assignment of pallet loads to storage locations (Storage Assignment); and rules for sequencing storage and retrieve requests (Interleaving). This paper deals with optimal storage assignment. Results are obtained which compare the operating performance of three storage assignment rules: random assignment, which is similar to the closest-open-location rule used by many currently operating systems; full turnover-based assignment: and class-based turnover assignment. It is shown that significant reductions in crane travel time (and distance) are obtainable from turnover-based rules. These improvements can, under certain circumstances, be directly translated into increased throughput capacity for existing systems, and may be used to alter the design (e.g., size and number of racks, speed of cranes, etc.) of proposed systems in order to achieve a more desirable system balance between throughput and storage capacity.

W e consider the problem of a newsvendor that is served by multiple suppliers, where any given supplier is defined to be either perfectly reliable or unreliable. By perfectly reliable we mean a supplier that delivers an amount identically equal to the amount desired, as is the case in the most basic variant of the newsvendor problem. By unreliable, we mean a supplier that with some probability delivers an amount strictly less than the amount desired. Our results indicate the following effects of unreliability: From the perspective of the newsvendor, the aggregate quantity ordered is higher than otherwise would be ordered if the newsvendor's suppliers were completely reliable. From the perspective of end customers, however, the service level provided is lower than otherwise would be provided if the newsvendor's suppliers were completely reliable. From the perspective of the suppliers, although reliability affects how much is ordered from a selected supplier, cost generally takes precedence over reliability when it comes to selecting suppliers in the first place. Even perfect reliability is no guarantee for qualification since, in an optimal solution, a given supplier will be selected only if all less-expensive suppliers are selected, regardless of the given supplier's reliability level. Nevertheless, the relative size of a selected supplier's order depends on its reliability.

This paper extends work previously reported on storage assignment rules for automatic warehousing systems to include interleaving; that is, the sequencing of storage and retrieve requests. Using both continuous analytical models and discrete evaluation procedures, this paper compares the operating performance of several storage assignment/interleaving policies. The results indicate that significant reductions in crane travel time (and distance) are obtainable in some real-world and/or previously modeled situations via the proposed storage assignment/interleaving policies. These reductions may be directly translated into increased throughput capacity for existing systems. The storage assignment/interleaving policies may also be used to improve the design of proposed systems to achieve a more desirable balance between throughput and storage capacity. Although the system examined is a high-rise automatic warehouse, the results presented have implications for the warehousing function in general.

This paper develops and analyzes a principal-agent model for product specification and production motivated by Ücore buyingÝ decisions at an automobile manufacturer. The model focuses on two important elements of the ÜcoreÝ buyer's responsibility: (1) assessing the supplier's capability, and (2) allocating some or all of a fixed level of some buyer-internal resource to help the supplier. Under the contracting scheme we model, the buyer (principal) delegates the majority of product specification and production activity to the supplier (agent), but retains the flexibility to commit a given, observable amount of an internally available, limited resource (e.g., engineering hours) to help the supplier. The supplier, in turn, allocates his resource (e.g., engineering hours) to produce the finished product. As in the motivating scenario, both the supplier's resource allocation and capability are assumed to be hidden from the buyer. Hence, the principal's problem is to determine a menu of (resource-commitment, transfer-price) contracts to minimize her total expected cost. Our analysis demonstrates that if buyer resource and supplier capability are substitutes, then the buyer's second-best involvement in the supplier's production process will be greater than first-best. The opposite is true if they are complements. Further, when the opportunity cost for the buyer's resource is zero, then in the substitutes case the buyer will commit all of its resource, while in the complements case the buyer may withhold some resources to screen the supplier type. We describe two applications of the modelÔone in inventory management and one in pharmaceutical drug discoveryÔto illustrate its applicability and versatility. Finally, we use insights from the model to suggest hypotheses for empirical study.production outsourcing, hidden information, adverse selection, contract menu, complements, substitutes

A one-warehouse N-retailer deterministic inventory system is examined. The objective is to determine the stocking policy which minimizes average system cost per unit time over the infinite time horizon. Necessary properties of an optimal policy are derived, and optimal solutions for the one-retailer and N identical retailer problems are given. Heuristic solutions for the general problem are suggested, tested against analytical lower bounds and, on the basis of these tests, found to be near optimal.

This paper examines the controversial role that Group Purchasing Organizations (GPOs) play in the supply chains for healthcare products. Among the controversies, perhaps the most fundamental one is whether or not GPOs reduce purchasing costs for their members. However, the fiercest controversy is around the “contract administration fees (CAFs)” that GPOs charge to manufacturers. We examine these and other controversies using a Hotelling duopoly model. Among our conclusions: GPOs increase competition between manufacturers and lower prices for healthcare providers. However, GPOs reduce manufacturers' incentives to introduce innovations to existing products. We also demonstrate that the existence of lower off‐contract prices is not, per se, evidence of anticompetitive behavior on the part of GPOs. Indeed, we demonstrate that, under certain circumstances, the presence of a GPO lowers off‐contract prices. We also examine the consequences of eliminating the “safe harbor” provisions that permit healthcare GPOs to charge CAFs to manufacturers, and conclude that it would not affect any party's profits or costs.

Abstract

This paper examines the impact of group purchasing organizations (GPOs) on healthcare-8 product supply chains. The supply chain we examine consists of a profit-maximizing manufacturer with a 9 quantity-discount schedule that is nonincreasing in quantity and ensures nondecreasing revenue, a profit-10