Two-Period Production Planning and Inventory Control Model with Demand Forecasts Updating

Zied Jemai (), Y. Dallery, Ali Cheaitoua and Christian van Delft ()
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Zied Jemai: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Y. Dallery: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Ali Cheaitoua: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Christian van Delft: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: We develop a stochastic two-period production/inventory planning model, which combines the use of information updating process with the flexibility of different delivery lead-times ordering strategy. Several decision variables are used: two orders are placed at the beginning of the first and second periods respectively and received immediately; another order is placed at the beginning of the first period and received with one period delay. The two different ordering/production modes, with zero and one period delivery lead-time, have different specific costs. The model permits to the retailer to return a certain amount of the available inventory to the supplier at the beginning of each period. Furthermore, a market information permits to update, between successive time periods, the random second period demand probability distribution. Via a dynamic programming approach, we exhibit the structure of the optimal policy, which is partially characterized by threshold levels. Then, via a numerical study, we exhibit the impact of the information quality of the proposed model.

Keywords: Demand management; supply chain optimization; procurement strategies; exogenous information; fore- cast updating (search for similar items in EconPapers)
Date: 2010-04-13
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Published in International Conference on Information Systems, Logistics and Supply Chain (ILS), Apr 2010, Casablanca, Morocco

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01672437

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