We study a multicomponent, multiproduct production and inventory system in which individual components are made to stock but final products are assembled to customer orders. Each component is produced by an independent production facility with finite capacity, and the component inventory is controlled by an independent base-stock policy. For any given base-stock policy, we derive the key perfor...

W consider the optimal production and inventory control of an assemble-to-order system with m components, one end-product, and n customer classes. A control policy specifies when to produce each component and, whenever an order is placed, whether or not to satisfy it from on-hand inventory. We formulate the problem as a Markov decision process and characterize the structure of an optimal policy...

Adaptive base stock policy is a well-known tool for managing inventories in non-stationary demand environments. This paper presents empirical tests of this policy using aggregate, firmlevel data. First, we extend a single-item adaptive base stock policy in previous literature to a multi-item case. Second, we transform the policy derived for the multi-item case to a regression model that relates...

We show that a modified base-stock policy is optimal for multiproduct, infinite-horizon production-inventory systems, where demand for the products is random and the products share a finite resource every period. We characterize the optimal policy for the case of homogeneous products. Because of the difficulty in computing the optimal base-stock levels for the heterogeneous case, we propose a h...

In this paper, we consider a single-stage manufacturing system with one machine, which makes a single product to stock to satisfy random demand. Customers inter-arrival times and production times are all exponential random variables. In order to represent customer impatience behavior caused by backlog, we employ a balking function, which is an arbitrary non-decreasing function of the backlogged...

This paper considers a problem of multi-period supply portfolio selection and execution with demand information updates. A supply portfolio specifies a buyer’s decision on selecting sourcing mix from among a group of suppliers. We develop a framework for optimal supply portfolio selection and execution. Further, we demonstrate that the optimal portfolio selection follows a base-stock policy and...

This paper is concerned with a periodic review inventory system with three consecutive delivery modes (fast, medium, and slow) and demand forecast updates. At the beginning of each period, the inventory level and demand information are updated, and decisions on how much to order using each of the three delivery modes are made. Both finite and infinite horizon problems are treated. Objectives co...

It is important to share demand information among the members in supply chains. In recent years, production and inventory systems with advance demand information (ADI) have been discussed, where advance demand information means the information of demand which the decision maker obtains before the corresponding actual demand arrives. Appropriate production and inventory control using demand info...

F many companies, inventory record inaccuracy is a major obstacle to achieving operational excellence. In this paper, we consider an inventory system in which inventory records are inaccurate. The manager makes inventory inspection and replenishment decisions at the beginning of each period. There is a cost associated with each inspection. If an inspection is performed, inventory records are al...

We consider a supply chain consisting of one manufacturer (capacitated supplier) and two retailers. We characterize the manufacturer’s optimal production policy under selective-information sharing, in which the manufacturer receives demand and inventory information from only one of the two retailers. We show that the manufacturer’s optimal production policy is a state-dependent base-stock polic...