Show/Hide Menu
Hide/Show Apps
Logout
Türkçe
Türkçe
Search
Search
Login
Login
OpenMETU
OpenMETU
About
About
Open Science Policy
Open Science Policy
Open Access Guideline
Open Access Guideline
Postgraduate Thesis Guideline
Postgraduate Thesis Guideline
Communities & Collections
Communities & Collections
Help
Help
Frequently Asked Questions
Frequently Asked Questions
Guides
Guides
Thesis submission
Thesis submission
MS without thesis term project submission
MS without thesis term project submission
Publication submission with DOI
Publication submission with DOI
Publication submission
Publication submission
Supporting Information
Supporting Information
General Information
General Information
Copyright, Embargo and License
Copyright, Embargo and License
Contact us
Contact us
Optimal production and inventory policies of priority and price-differentiated customers
Date
2007-01-01
Author
Duran, Serhan
SİMCHİ-LEVİ, David
Swann, Julie L.
Metadata
Show full item record
This work is licensed under a
Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License
.
Item Usage Stats
191
views
0
downloads
Cite This
Many firms are exploring production and supply chain strategies when customers may be segmented into different classes based on service level or priority. Such segmentation can result in a more efficient production system as well as a better match between supply and demand. In this research, we analyze a system with customer classes 1 and 2, where customer class 1 has a higher priority of fulfillment than customer class 2 in the same period. We develop an optimal production and inventory strategy that rations current and future limited capacity between customer classes 1 and 2, through reserving inventory for the future and accepting orders now for future delivery when demand and production are general stochastic functions. We show that a modified order-up-to policy ( S*, R-i*, B-i*) is optimal in each period. S* is the targeted inventory level after production at the beginning of the period; R-1* represents the optimal inventory to be protected from being sold to both classes, and R-2* is the additional amount of inventory to protect from class 2. B-2* is the optimal amount of future capacity to make available to both classes through backlogging, and B-1* is the additional backlogging amount for class 1. Computational analysis shows that the differentiation strategy can result in a significant profit improvement over a traditional inventory policy.
Subject Keywords
Inventory policy
,
Tactical inventory
,
Customer differentiation
,
Threshold policies
,
Two-class
,
Priority differentiated
,
Price differentiated
URI
https://hdl.handle.net/11511/33070
Journal
IIE TRANSACTIONS
DOI
https://doi.org/10.1080/07408170600972982
Collections
Department of Industrial Engineering, Article
Suggestions
OpenMETU
Core
Optimal allocation policies in a two-echelon inventory problem with fixed shipment costs
Gullu, R; Erkip, N (1996-12-01)
This study investigates the stock allocation problems in a two-echelon distribution system which consists of a central warehouse and two identical retailers. We restrict our attention to two-period order cycles where the period lengths are allowed to be different. Shipments from the supplier to the warehouse arrive at the beginning of the order cycle (i.e. at the beginning of the first period). In each order cycle, there are two shipment opportunities from the warehouse to the retailers: at the beginning of...
Apply Quantitative Management Now
TARHAN, AYÇA; Demirörs, Onur (Institute of Electrical and Electronics Engineers (IEEE), 2012-05-01)
The Assessment Approach for Quantitative Process Management (A2QPM) helps identify software process measures for quantitative analysis even when organizations lack formal systems for process measurement. A2QPM is the first approach to quantitative management that offers software organizations a well-defined, detailed guideline for assessing their software processes and applying beneficial quantitative techniques to improve them. All the A2QPM applications we've described resulted in quantitative analysis im...
Tactical inventory and backorder decisions for systems with predictable production yield
MART, Turgut; Duran, Serhan; Bakal, İsmail Serdar (2013-06-01)
We consider a manufacturing system with stochastic demand and predictable production yield. The manufacturer has predetermined prices and limited production capacity in each period. The manufacturer also has the option to save some inventory for future periods even if there is demand in the current period. The demand that is not met is lost or may be backordered for only one period. Our objective is to maximize the expected profit by choosing optimal produce-up-to level ((Y) over bar*(t)), save (S*(t)) and ...
Optimal pricing and production decisions in utilizing reusable containers
Atamer, Busra; Bakal, İsmail Serdar; Bayındır, Zeynep Pelin (2013-06-01)
In this study, we focus on pricing and production decisions in utilizing reusable containers with stochastic customer demand. We consider a manufacturer that sells a single product to the customers in reusable containers with two supply options: (i) brand-new containers and (ii) returned containers from customers. The return quantity depends on both customer demand and the acquisition fee determined by the manufacturer. The unit cost of production using brand-new containers is different than the unit cost o...
Optimal operation policies for multi-item vending machines with product dedicated variant towers
Şahin, Hacı; Duran, Serhan; Department of Industrial Engineering (2019)
In this thesis we focus on modelling and solving the operation policy problem of a seller by managing its vending machines at different locations. Each vending machine has sale unit towers, which can hold different items; therefore, the decisions of which items should be kept at which location and with how many sale towers become important. Due to the uncertainties faced in demand, solution of the problem determines the allocation of towers to the items and machines throughout a time horizon. Stochastic opt...
Citation Formats
IEEE
ACM
APA
CHICAGO
MLA
BibTeX
S. Duran, D. SİMCHİ-LEVİ, and J. L. Swann, “Optimal production and inventory policies of priority and price-differentiated customers,”
IIE TRANSACTIONS
, pp. 845–861, 2007, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/33070.