Supplies from developing countries: Optimal order quantities under loss risks

Autor:	Jayavel Sounderpandian, Sameer Prasad, Manu S. Madan
Rok vydání:	2008
Předmět:	Information Systems and Management Production planning Operations research Computer science Strategy and Management Supply chain Production (economics) Economic order quantity Finished good Management Science and Operations Research Expected loss Lead time Stochastic programming
Zdroj:	Omega. 36:122-130
ISSN:	0305-0483
Popis:	When raw material suppliers of a global supply chain are situated in developing countries, not only will there be long lead times but there could also be a possibility of material losses in transit. The magnitude of the losses will be uncertain and can be significant. We consider the optimization of order quantity decisions in such situations. The long lead times imply that we need to take into account the uncertainty in finished goods demands for which the raw materials are to be ordered. The order quantities have to be optimized carefully as they determine the “real options” that become available later in production plans. Using data from the plywood industry and using stochastic programming we demonstrate a method for solving such problems. The method combines simulation and optimization. An interesting observation we make is that the optimal order quantity of a material need not be monotonic in expected loss of that material. In addition, we offer explanations as to why the expected loss need not be monotonic.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::b18fb1a9083235adf40b44f5cf546f6a https://doi.org/10.1016/j.omega.2005.10.009 Zobrazit plný text záznamu Full Text from ScienceDirect