Inventory allocation and shipping when demand temporarily exceeds production capacity

Wooseung Jang, Daeki Kim and Kwangtae Park

European Journal of Operational Research, 2013, vol. 227, issue 3, 464-470

Abstract: We address the concept of an integrated inventory allocation and shipping model for a manufacturer with limited production capacity and multiple types of retailers with different backorder/waiting and delivery costs. The problem is to decide how to allocate and deliver produced items when the total retailer demand exceeds the production capacity, so that total retailer backorder and delivery costs are minimized. Our analytical model provides optimal allocation and shipping policies from the manufacturer’s viewpoint. We also investigate the allocation strategy of a manufacturer competing with other retailers to directly sell to end consumers.

Keywords: Inventory allocation; Shipping; Customer waiting cost; Supply chain management (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:227:y:2013:i:3:p:464-470

DOI: 10.1016/j.ejor.2013.01.013

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