In this study, a two-echelon supplier-manufacturer system with finite production rate and lead time is proposed. It is assumed that shortage is not permitted and the lot size of manufacturer (second echelon) is m-factors of the lot size of supplier (first echelon) and supplier can supply the manufacturer’s lot size in several shipments in each cyc...

The theory on multi-echelon production/inventory systems is a core theory within supply chain management. It provides useful insights for design of supply chains and may be used for tactical and operational planning decisions. The multi-echelon theory started with the seminal paper of Clark and Scarf in 1960. In this tutorial, we describe for which systems optimal policies are known, which key ...

This paper demonstrates optimal policies for capacitated serial multiechelon production/inventory systems. Extending the Clark and Scarf (1960) model to include installations with production capacity limits, we demonstrate that a modified echelon base-stock policy is optimal in a two-stage system when there is a smaller capacity at the downstream facility. This is shown by decomposing the dynam...

We study a multiechelon supply chain model that consists of a production level and several transportation levels, where the demands can exist in the production echelon as well as any transportation echelons. With the presence of stationary production capacity and general cost functions, our model integrates production, inventory and transportation decisions and generalizes existing literature o...

We consider a two-echelon assembly system producing a single final product for which the demand is known. The first echelon consists of several parallel stages, whereas the second echelon consists of a single assembly stage. We assume that the yield at each stage is random and that demand needs to be satisfied in its entirety; thus, several production runs may be required. A production policy s...

We study the optimal integrated production/inventory policy in a two-echelon supply chain with one manufacturer and one retailer. The manufacturer produces items in her production facility and keeps the Þnished goods in inventory. The manufacturer’s production facility deteriorates with usage and is subject to failure. Under the assumption that the manufacturer has on-line access to the retaile...

We consider customer response time minimization in a two-echelon supply chain system with stochastic demand where the first echelon consists of one production plant and the other of one retailer. Traditionally models of this type only seek to minimize traditional operating costs. However, because of the highly competitive nature of the market, it is also essential for the manufacturer to respon...

We consider a two-echelon timber supply chain in which the first echelon consists of several stands to be harvested and the second echelon consists of mills to be procured with logs of different length. This problem aims at minimizing harvesting and transportation costs for one production period, while satisfying demand expressed as mix of volumes of specific log types. Harvesting cost, which i...

T his paper studies echelon stock (R, nQ) policies in serial production/inventory systems with stochastic demand. We provide a recursive procedure to compute the steady state echelon inventory levels of the systems, which can be used to evaluate the long-run average holding and backorder costs as well as other performance measures. The procedure is based upon an observation of a relationship be...