Analysis of Postponement Strategy by EPQ-based Models

T.C. Edwin Cheng (), Jian Li (), C.L. Johnny Wan () and Shouyang Wang ()
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T.C. Edwin Cheng: The Hong Kong Polytechnic University
Jian Li: School of Economics & Management Beijing University of Chemical Technology (BUCT)
C.L. Johnny Wan: The Hong Kong Polytechnic University
Shouyang Wang: Chinese Academy of Sciences Academy of Mathematics & Systems Science

Chapter Chapter 3 in Postponement Strategies in Supply Chain Management, 2010, pp 43-79 from Springer

Abstract: In this chapter we develop EPQ-based models with and without stockout stockout to examine the impact of postponement. We formulate the total average cost functions of the two scenarios for producing and keeping n end-products in a supply chain, in which their demands are known and deterministic. Using standard optimization techniques optimization technique , we show that postponed customization of end-products results in a lower total average cost in certain circumstances. We also find that two key factors that influence postponement decisions are variance of the machine utilization rates and variance of the backorder costs.

Keywords: Supply Chain; Setup Cost; Customer Demand; Production Quantity; Total Average Cost (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-1-4419-5837-2_3

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DOI: 10.1007/978-1-4419-5837-2_3

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