Economic selection of process mean and lot‐sizing decisions for multi‐newsvendor supply chain

Abstract

Two related problems are integrated in this paper, the first is the targeting problem and another is production/inventory decisions in a supply chain. The supply chain under consideration consists of a supplier of raw material, a single producer, and multiple newsvendors. The producer can adjust the process mean before starting the production run. Once set to a certain target value, the process mean is not changed until the production lot is completed. At the end of a production run, the producer screens the lot and uses specification limits to evaluate the quality of the item. Nonconforming items are scrapped with no salvage value; however, conforming items are delivered to newsvendors who are subjected to random demand. If demand on a newsvendor in a season is lower than anticipated, surplus items will be returned to the producer at a certain transportation cost. We first develop a mathematical model that maximizes the expected total profit of the supply chain. Then, a table for two special functions is devised to simplify the solution method and is used to find the optimal solution of the proposed model. We also study the significance of this integration by comparing the performance of the proposed model with an independent model where the process mean selection and lot‐sizing decisions are found separately.

An integrated process targeting and continuous review system with sampling inspection

“…They concluded that demand variation should not be neglected in the integrated inventory-targeting problem. Darwish and Aldaihani 15 studied the integrated inventory-targeting problem for a single-vendor multi-newsvendor supply chain. They demonstrated the importance of integration through a illustrative examples.…”

Retailer driven supply chain with limited transportation capacities and supply demand market index

“…Supply chains (SCs) have been defined in many literature studies, they cover all the activities engaged in production from the raw material till the disposal at the destined customer with many partners involved to perform such activities (Pratima and Sharma, 2014;Shah, 2009;Darwish and Aldaihani, 2015;Dalalah, 2016). In particular, the SC encompasses the footsteps necessary to carry a good or service from the supplier or manufacturer to the client.…”

“…Continuous replenishment policies with fixed disposal costs were also addressed by Pince et al (2008). Rate-based continuous replenishments policies with deterministic demand have been addressed in Darwish and Aldaihani (2015). This paper introduces a variant of the JRP with LSP and demand constraints.…”