Capacity planning and range setting quantity flexibility contracts as a manufacturer

Pesen, Şafak
Quantity Flexibility contract is an arrangement where parties agree upon a scheme of forming ranges on volumes for their future transactions. The contract is based on setting upper and lower limits on replenishment orders as simple multiples of point estimates updated, published and committed by the buyers. We introduce a manufacturer with a limited capacity; also capable of subcontracting, for deliveries with a known lead time. He offers a Quantity Flexibility (QF) contract to a buyer while he has an active contract with another buyer serving a market with known demand forecast distributions. Using two-stage stochastic programming we study the effects of flexibility multiples and the environmental factors on the buyers̕ incentives and manufacturer̕s capacity planning. Finally, the motivations of the Supply Chain actors to behave independently or to be involved into the integrated iv supply chain where information asymmetry is removed are investigated. Our experiments underline the critical roles played by the forecast accuracy and information sharing.


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Citation Formats
Ş. Pesen, “Capacity planning and range setting quantity flexibility contracts as a manufacturer,” M.S. - Master of Science, Middle East Technical University, 2003.