Production and Capacity Utilization Strategies in Supply Chains for Complex Engineered Products

Ashesh Kumar Sinha and Ananth Krishnamurthy

Production and Operations Management, 2020, vol. 29, issue 2, 462-480

Abstract: We analyze production and capacity utilization strategies in a supply chain where individual components can be made either at a shared in‐house manufacturing facility or at dedicated facilities of external subcontractors. The manufacturer and the subcontractor differ in terms of costs, production capacities, rates, and service level capabilities. Using Markov decision process models, we determine the optimal policy and characterize its structure. We derive the set of conditions that partitions the state space into regions and characterize optimal policies in each region. We derive optimal policies for manufacturer and subcontractors under different settings and show that the optimal policy has a multi‐index structure in some settings.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/poms.13125

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:29:y:2020:i:2:p:462-480

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().