A serial inventory system with supplier selection and order quantity allocation |
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Authors: | Abraham Mendoza José A Ventura |
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Institution: | 1. Department of Industrial Engineering, Universidad Panamericana, Guadalajara, Jalisco 45010, Mexico;2. Harold and Inge Marcus Department of Industrial and Manufacturing Engineering, The Pennsylvania State University, University Park, PA 16802, USA |
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Abstract: | Given the prevalence of both supplier selection and inventory control problems in supply chain management, this article addresses these problems simultaneously by developing a mathematical model for a serial system. This model determines an optimal inventory policy that coordinates the transfer of items between consecutive stages of the system while properly allocating orders to selected suppliers in stage 1. In addition, a lower bound on the minimum total cost per time unit is obtained and a 98% effective power-of-two (POT) inventory policy is derived for the system under consideration. This POT algorithm is advantageous since it is simple to compute and yields near optimal solutions. |
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Keywords: | Supply chain management Supplier selection Order quantity allocation Multi-echelon inventory system Power-of-two policy |
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