Optimal production and inventory decisions for supply chains with one producer and multiple newsvendors

Majid M. Aldaihani and M.A. Darwish

International Journal of Services and Operations Management, 2013, vol. 15, issue 4, 430-448

Abstract: This paper considers a supply chain with a single manufacturer supplying a newsvendor-type item to multiple retailers (newsvendors). The manufacturer produces the item in batches at a finite rate and ships the output to the retailers. The retailers then have to satisfy a stochastic demand which follows a general probability distribution. The objective is to view the system as an integrated whole and determine the production and shipment schedule which maximises the expected total profit in a selling period. The concavity of the expected total profit function is established, the global optimal solution is derived, and a simple but efficient algorithm is set out. Two special cases are considered, the first of which is for fast-moving items and the other for slow-moving items.

Keywords: operations management; supply chain management; SCM; newsvendors; multiple retailers; production decisons; inventory decisions; optimisation; scheduling. (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijsoma:v:15:y:2013:i:4:p:430-448

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