Optimal Policies for a Dual-Sourcing Inventory Problem with Endogenous Stochastic Lead Times

Electronic Companion to “Optimal Policies for a Dual-Sourcing Inventory Problem with Endogenous Stochastic Lead Times”

Determining Optimal Number of Suppliers in a Multiple Sourcing Model under Stochastic Lead Times

Employing more than one supplier and splitting orders between them is a strategy employed in supply chains to lessen the lead-time risk in unstable environments. In this paper we present a multiple-sourcing inventory system with stochastic lead-times and constant demand controlled by a continuous review, reorder point-order quantity inventory policy. We consider the situation in which the order...

Asymptotic Optimality of Tailored Base-Surge Policies in Dual-Sourcing Inventory Systems

Dual-sourcing inventory systems, in which one supplier is faster (i.e. express) and more costly, while the other is slower (i.e. regular) and cheaper, arise naturally in many real-world supply chains. These systems are notoriously difficult to optimize due to the complex structure of the optimal solution and the curse of dimensionality, having resisted solution for over 40 years. Recently, so-c...

Effective Dual Sourcing with a Single Index Policy

We consider a single stage periodic-review inventory system with backorders and dual sourcing: Replenishment can occur through a regular channel and/or a more expensive expedited channel with a smaller lead time. Globally optimal policies for these problems are in general highly complex; we therefore introduce a simple class of heuristic base stock policies. We call our class of policies the si...

Optimal control of a dual service rate M/M/1 production-inventory model

We analyze a dual-source, production-inventory model in which the processing times at a primary manufacturing resource and a second, contingent resource are exponentially distributed. We interpret the contingent source to be a subcontractor, although it could also be overtime production. We treat the inventory and contingent sourcing policies as decision variables in an analytical study and, ad...