In this study, the method of model reference control is used to implement a decision support system for inventory management. The inventory is controlled on the basis of minimizing variable costs while satisfying a certain percent of customer demand. Value-at-Risk analysis is used to determine the required safety stock for the controller, so that the uncertainties are buffered into the inventor...

In this paper, we develop a joint quality control and preventive maintenance policy for a production system producing conforming and non-conforming units. The considered system consists of one machine which must supply another production line operating on a just-in-time basis. According to the proportion l of non-conforming units observed on each lot and compared to a threshold value lm, one de...

In recent years the development and dissemination of logistics knowledge have caused that companies have realized the need to optimize the processes related to the movement and accumulation of goods in the supply chain. On the one hand, financial aspects force companies to reduce inventory levels, on the other, the same companies, aiming at maintaining the continuity of production, must ensure ...

This paper theoretically and empirically examines the conventional wisdom in procurement management that often portrays supply inspections and supplier plant inspections as substitutes. We develop a theoretical model that focuses on potential internal spillover costs of the buyer receiving low-quality inputs and external spillover costs should low-quality inputs go undetected. Key to our analys...

We present an agent-based model of a minimal economy containing households, retail banks, and producers of consumer and capital goods. Household behavior is based on the buffer-stock savings model by Deaton (1961), while the profit-maximizing firms employ reinforcement learning to determine pricing and production. Competitive retail banks facilitate the flow of funds between households and prod...

20.2 Applications of quantification 20.4 20.3 Issues to consider in quantification 20.5 Preparing an action plan for quantification • Using centralized or decentralized quantification • Using manual or computerized methods for quantification • Estimating the time required • Developing and organizing the medicines list • Filling the supply pipeline • Estimating the procurement period • Consideri...

We develop an analytically tractable consumption-savings model for a liquidityconstrained agent who faces both permanent and transitory income shocks. We find that risk aversion and intertemporal substitution have very different effects on both consumption and the steady-state savings target. Moderate changes in risk aversion have large effects on consumption and buffer-stock savings. With perm...

We study mixed integer programming formulations of variants of the discrete lot–sizing problem. Our approach is to identify simple mixed integer sets within these models and to apply tight formulations for these sets. This allows us to define integral linear programming formulations for the discrete lot–sizing problem in which backlogging and/or safety stocks are present, and to give extended f...

This work empirically assesses the degree to which inventory decisions made by entrepreneurs and small businesses are informed by the logic underlying the newsvendor or base stock model and are influenced by the decision-maker’s risk profile. We used a weband email-based survey, combined with a telephone follow-up to elicit risk profiles, obtaining 51 usable responses. Our findings suggest that...

This paper is concerned with dynamic control of stochastic processing networks. Specifically, it follows the so called “heavy traffic approach,” where a Brownian approximating model is formulated, an associated Brownian optimal control problem is solved, the solution of which is then used to define an implementable policy for the original system. A major challenge is the step of policy translat...