The single period procurement problem where dedicated supplier capacity can be reserved

Karuna Jain and Edward A. Silver

Naval Research Logistics (NRL), 1995, vol. 42, issue 6, 915-934

Abstract: In this article we consider the single period procurement strategy for an item with uncertainty in its demand and uncertainty in the capacity of the supplier. Dedicated capacity can be ensured by paying a premium charge to the supplier. The other decision variable is the replenishment quantity to request. It turns out to be very easy to select the best value of this latter quantity. On the other hand, we are only able to characterize the general behavior of the expected profit as a function of the level of dedicated capacity. In general, there can be multiple local maxima as a function of the dedicated capacity. However, for the special, but important, case of normally distributed demand, normally distributed capacity and a linear cost for reserving capacity, an algorithm is developed for finding the best level of dedicated capacity. Some preliminary insights regarding the extension to multiple periods are presented. © 1995 John Wiley & Sons, Inc.

Date: 1995
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1002/1520-6750(199509)42:63.0.CO;2-M

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:wly:navres:v:42:y:1995:i:6:p:915-934

Access Statistics for this article

More articles in Naval Research Logistics (NRL) from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().