Integrated inventory management and supplier base reduction in a supply chain with multiple uncertainties

Song, Dong-Ping; Dong, Jing-Xin; Xu, Jingjing

Abstract

This paper considers a manufacturing supply chain with multiple suppliers in the presence of multiple uncertainties such as uncertain material supplies, stochastic production times, and random customer demands. The system is subject to supply and production capacity constraints. We formulate the integrated inventory management policy for raw material procurement and production control using the stochastic dynamic programming approach. We then investigate the supplier base reduction strategies and the supplier differentiation issue under the integrated inventory management policy. The qualitative relationships between the supplier base size, the supplier capabilities and the total expected cost are established. Insights into differentiating the procurement decisions to different suppliers are provided. The model further enables us to quantitatively achieve the trade-off between the supplier base reduction and the supplier capability improvement, and quantify the supplier differentiation in terms of procurement decisions. Numerical examples are given to illustrate the results.

• Journal Article Type: Article
• Acceptance Date: Jul 31, 2013
• Online Publication Date: Aug 8, 2013
• Publication Date: Feb 1, 2014
• Deposit Date: May 13, 2020
• Journal: European Journal of Operational Research
• Print ISSN: 0377-2217
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 232
• Issue: 3
• Pages: 522-536
• DOI: https://doi.org/10.1016/j.ejor.2013.07.044
• Keywords: Management Science and Operations Research; Modelling and Simulation; Information Systems and Management
• Public URL: https://uwe-repository.worktribe.com/output/5575404
• Additional Information: This article is maintained by: Elsevier; Article Title: Integrated inventory management and supplier base reduction in a supply chain with multiple uncertainties; Journal Title: European Journal of Operational Research; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.ejor.2013.07.044; Content Type: article; Copyright: Copyright © 2013 Elsevier B.V. All rights reserved.