OPRE 7372. Advanced Topics in Supply Networks - Syllabus

Presents a study on newsvendor bounds and features a heuristic for optimal policies in serial supply chains. Method of the study; Results and discussion. 19. On the Benefits of Inventory-Pooling in Production-Inventory Systems. Manufacturing & Service Operations Management, Jan2002, Vol. 4 Issue 1, p12, 5p By Kim, Jon-Seok; Benjaafar, Saif. Abstract: Presents a study which examined the benefits of inventory-pooling in productioninventory systems. Method of the study; Results and discussion; Conclusion. 20. The Value of Information Sharing in a Two-Stage Supply Chain with Production Capacity Constraints: The Infinite Horizon Case. Manufacturing & Service Operations Management, Jan2002, Vol. 4 Issue 1, p21, 4p By Yao Zhao; Simchi-Levi, David. Abstract: Discusses the value of information sharing in a two-stage supply chain with production capacity constraints. Characteristics of a manufacturer’s optimal production-inventory policy; Situations under which information sharing is most beneficial; Impact of frequency and timing in which demand information is shared on the manufacturer. 21. Gaining Benefits from Joint Forecasting and Replenishment Processes: The Case of Auto-Correlated Demand. Manufacturing & Service Operations Management, Jan2002, Vol. 4 Issue 1, p55, 20p By Aviv, Yossi. Abstract: Presents a research paper which considers a cooperative, two-level supply chain consisting of a retailer and a supplier. Examination of three types of supply chain configurations; Suggestion of a set of stylized models to study the three settings addressed in the study, and use them to provide managerial insights into the value of information sharing and collaborative forecasting. 22. On the Complementary Value of Accurate Demand Information and Production and Supplier Flexibility. Manufacturing & Service Operations Management, Apr2002, Vol. 4 Issue 2, p99, 15p By Milner, Joseph M.; Kouvelis, Panos. Abstract: We study the value of information, production flexibility, and supplier flexibility for a good for which an initial and a subsequent order may be placed. We consider a Bayesian model of demand in which the unknown mean demand rate is assumed to have a prior, which is a mixture of two normal distributions corresponding to the demand forecast for an innovative (fashion) good. We develop three models of production flexibility: a static model requiring initial placement of both orders, a partially dynamic model requiring a fixing of the time that the second order will be made, and a fully dynamic model with no restrictions on ordering. Supplier flexibility is modeled through supply lead times. We observe that the magnitude of the savings from the static to the fully flexible model, corresponding to the sum of the values of information and production flexibility, reflects all sources of variability: differences between demand means of the prior mixture, variability within each prior, and variability about the observed mean. We observe that as the difference between high and low demand cases increases, the value of information increases, though for long lead times, production flexibility is required to take advantage of the updated information. Further, we observe that the greater the uncertainty within each prior distribution, the greater the value of information relative to the value of production flexibility, particularly for long lead times. However, the greater the uncertainty around the mean demand, which is the uncertainty that cannot be resolved through observation, the lower the value of information. Finally, we observe that the value of supply flexibility grows initially in a concave then convex manner as a function of the supply lead times. 23. Coordination and Flexibility in Supply Contracts with Options. Manufacturing & Service Operations Management, Jul2002, Vol. 4 Issue 3, p171, 37p By Barnes-Schuster, Dawn; Bassok, Yehuda; Anupindi, Ravi. Abstract: We investigate the role of options (contingent claims) in a buyer-supplier system. Specifically using a teo-period model with correlated demand, we illustrate how options provide flexibility to a buyer to respond to market changes in the second period. We also study the implications of such arrangements between a buyer and a supplier for coordination of the channel. We show that, in general, channel coordination can be achieved only if we allow the exercixe price to be piecewise linear. We develop sufficient conditions on the cost parameters such that linear prices coordinate the channel. We derive the appropriate prices for channel coordination which, however, violate the individual rationality constraint for the supplier. Contrary to popular be lief (based on simpler models) we show that credit for returns offered by the supplier does not always coordinate the channel and alleviate the individual rationality constraint. Credit for returns are useful only on a subset of the feasibility region under which channel coordination is achievable with linear prices. Finally, we demonstrate (numerically) the benefits of options in improving channel performance and evaluate the magnitude of loss due to lack of coordination. 24. Design and Analysis of a Smart Market for Industrial Procurement. Manufacturing & Service Operations Management, Jan2001, Vol. 3 Issue 1, p2, 3p. By Jeremie Gallien, Lawrence M. Wein. Abstract: Discusses the design and analysis of an online multi-item procurement and auction mechanism adapted to supply environments with production capacity constraints. Description of the mechanism structure for procurement contracts; Importance of the calculation of the myopic best response bid in the analysis of supply; Establishment of convergence bounds in the analysis of supply. 25. Coordinating Production and Delivery Under a (z, Z)-type Vendor-Managed Inventory Contract. Manufacturing & Service Operations Management, Jan2001, Vol. 3 Issue 1, p11, 3p. By Michael J. Fry, Roman Kapuscinski, Tava Lennon Olsen. Abstract: Discusses the use of a vendor-managed inventory (VMI) agreement model between a single retailer and supplier to determine the benefits offered by coordinating production and delivery under VMI. Description of the VMI; Use of the VMI model based on direct experiences with VMI models; Characterization of the optimal policy of supplier and retailer operating under a VMI contract. 26. Serial Production/Distribution Systems Under Service Constraints. Manufacturing & Service Operations Management, Jan2001, Vol. 3 Issue 1, p43, 8p. By Tamer Boyaci, Guillermo Gallego. Abstract: We analyze the problem of minimizing average inventory costs subject to fill-rate type of service-level constraints in serial and assembly production/distribution systems. We propose optimal and heuristic procedures to solve this problem. Our model and solution procedures can be used to manage the fill rate or fill rate within a ”time window” service measures. We also relate our service-constrained model to the traditional model with backorder costs and show that it is possible to prespecify backorder cost rates to achieve desired service levels. We explore the inventory cost impact of such a practice, and we find that the cost penalty can be very high. 27. Supply Chain Coordination when Demand Is Shelf-Space Dependent. Manufacturing & Service Operations Management, Jan2001, Vol. 3 Issue 1, p82, 6p. By Yunzeng Wang and Yigal Gerchak. Abstract: Consider a manufacturer or wholesaler who supplies some item to retailers facing demand rates that depend on the shelf or display space that is devoted to that product by themselves and their competitors. The manufacturer, via the use of financial levers at her disposal, wishes to coordinate this decentralized chain while making a profit. We model the physical scenario as one of constant displayed inventory level (on which demand rate depends positively) and continuous replenishment. With a single retailer, we show that to coordinate the channel and make a profit the manufacturer needs to augment the wholesale price lever by another– an inventory holding costs subsidy offered to the retailer. When multiple retailers compete in that product’s market, there are two ways to envision and model the demand and market split. One assumes that market demand depends on aggregate inventory displayed, and then splits according to individual display levels. The other ”assigns” customers to retailers according to their display levels, and then assumes that purchases are a function of the display level at the retailer selected. We characterize retailers’ Nash equilibria in these models, and we explore whether the manufacturer can coordinate such channels. 28. Assessing the Benefits of Different Stock-Allocation Policies for a Make-to-Stock Production System. Manufacturing & Service Operations Management, Apr2001, Vol. 3 Issue 2, p105, 17p. By Francis de Vericourt, Fikri Karaesmen, Yves Dallery. Abstract: We consider a manufacturing facility that produces a single item that is demanded by several different classes of customers. The inventory-related cost performance of such a system can be improved by effective allocation of production and inventories. We obtain the optimal parameters for three easily implementable allocation policies. Our results cover the case of linear backorder costs as well as fill-rate constraints. We compare the optimal performance of these control policies to gain insights into the benefits of different production and stock-allocation rules. 29. Coordinating Production and Delivery Under a (z, Z)-Type Vendor-Managed Inventory Contract. Manufacturing & Service Operations Management, Apr2001, Vol. 3 Issue 2, p151, 23p. By Michael J. Fry, Roman Kapuscinski, Tava Lennon Olsen. Abstract: This paper models a type of vendor-managed inventory (VMI) agreement that occurs in practice called a (z, Z) contract. We investigate the savings due to better coordination of production and delivery facilitated by such an agreement. The optimal behavior of both the supplier and the retailer are characterized. The optimal replenishment and production policies for a supplier are found to be up-to policies, which are shown to be easily computed by decoupling the periods when the supplier outsources from those when the supplier does not outsource. A simple application of the newsvendor relation is used to define the retailer’s optimal policy. Numerical analysis is conducted to compare the performance of a single supplier and a single retailer operating under a (z, Z) VMI contract with the performance of those operating under traditional retailer-managed inventory (RMI) with information sharing. Our results verify some observations made in industry about VMI and show that the (z, Z) type of VMI agreement performs significantly better than RMI in many settings, but can perform worse in others.