Integrated capacity and inventory management with capacity acquisition lead times

Mincsovics, GZ Gergely; Tan, Tarkan; Alp, Osman

doi:10.1016/j.ejor.2008.04.016

Cited by 24 publications

(8 citation statements)

References 10 publications

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“…At the operational level, many papers have studied capacity reservation (Bonser and Wu, 2001;Hazra and Mahadevan, 2009;Serel et al, 2001;Serel, 2007;Van Norden and Van de Velde, 2005;Mincsovics et al, 2009). The main objective of these studies is to decide on getting materials supplied either at a lower price by reserving capacity in advance with the long-term supplier or at a higher price from the spot market (Hazra and Mahadevan, 2009) or making reservations to guarantee the delivery of (a portion of) the reserved quantity, given the existence of the more expensive spot market (Serel et al, 2001) or given the uncertain availability of the item in the spot market (Serel, 2007).…”

Section: Literature Reviewmentioning

confidence: 99%

Capacity reservation and utilization for a manufacturer with uncertain capacity and demand

2017

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Section: Literature Reviewmentioning

confidence: 99%

Capacity reservation and utilization for a manufacturer with uncertain capacity and demand

2017

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“…Our work is closely related to the problems considered by Tan and Alp (2005), Alp and Tan (2007), and Mincsovics et al (2006). These three papers consider settings similar to ours, ignoring the labor supply uncertainty.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Alp and Tan (2007) extend this analysis by including the tactical level decision of determining the permanent capacity levels. Finally, Mincsovics et al (2006) model and analyze the problem under a lead time associated with the acquisition of contingent capacity.…”

Section: Literature Reviewmentioning

confidence: 99%

Integrated workforce capacity and inventory management under labour supply uncertainty

Pac

Alp

Tan

2009

International Journal of Production Research

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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. Corresponding author Abstract: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 flexible capacity uncertainty. The capacity planning problem is investigated from the workforce planning perspective where the capacity can be temporarily increased by utilizing contingent workers from an external labor 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. 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 labor supply agency in each period), integrated with the optimal operational decision of how much to produce in each period. We analyze the characteristics of the optimal policies and we conduct an extensive numerical analysis that helps us provide several managerial insights.

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“…Their model does not consider long-term changes to production capacity. Mincsovics et al (2009) consider a similar problem and focus on the time required to make temporary changes to the production capacity. Ç ınar and Güllü (2012) analyse an inventory problem in which production can be outsourced as a hedge against uncertainty in demand and production capacity.…”

Section: Introductionmentioning

confidence: 99%

Managing inventory and production capacity in start-up firms

Archibald

Possani

Thomas

2015

Journal of the Operational Research Society

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Abstract:We consider the problem of managing inventory and production capacity in a startup manufacturing firm with the objective of maximising the probability of the firm surviving as well as the more common objective of maximising profit. Using Markov decision process models, we characterise and compare the form of optimal policies under the two objectives. This analysis shows the importance of coordination in the management of inventory and production capacity. The analysis also reveals that a start-up firm seeking to maximise its chance of survival will often choose to keep production capacity significantly below the profit maximising level for a considerable time. This insight helps us to explain the seemingly cautious policies adopted by a real start-up manufacturing firm.

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Integrated capacity and inventory management with capacity acquisition lead times

Cited by 24 publications

References 10 publications

Capacity reservation and utilization for a manufacturer with uncertain capacity and demand

Capacity reservation and utilization for a manufacturer with uncertain capacity and demand

Integrated workforce capacity and inventory management under labour supply uncertainty

Managing inventory and production capacity in start-up firms

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