Dynamic lead time quotation under responsive inventory and multiple customer classes

Date

2017-01-01

Author

Savaşaneril Tüfekci, Seçil
Sayin, Ece

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

145
views

0
downloads

We address the lead time quotation problem of a manufacturer serving multiple customer classes. Customers are sensitive to the quoted lead times and the manufacturer has the flexibility to keep inventory to improve responsiveness. We model the problem as a Markov decision process and characterize the optimal lead time quotation, rationing, and production policies. We then define internal and external service level measures and analyze the impact of inventory keeping decision on these measures. Before analyzing the impact, we first derive the relation between inventory level and lead time quotes. We then show that the effect of inventory level on the service levels may not follow the intuition. We also study alternative lead time quotation and production schemes. We contrast the performance of these alternative policies with that of the optimal policy. Specifically, through a numerical study, we quantify the value of controlled arrivals and customer rejection, the value of information on customer status, and the value of a far-sighted policy. Through the numerical study, we also identify the effect of revenue mix and demand mix on the inventory keeping decisions and the performance measures. Finally, we measure the impact of lead time quotation on resource pooling (i.e., inventory and capacity pooling). We show that the value of resource pooling is limited under the optimal policy, since lead time quotation is already effective in balancing the demand with capacity, and in allocating the resources among different customer classes.

Subject Keywords

Lead time quotation, Make-to-stock queue, Revenue management, Multiple customer classes, Inventory rationing, Control of queues

URI

https://hdl.handle.net/11511/33310

Journal

OR SPECTRUM

DOI

https://doi.org/10.1007/s00291-016-0445-z

Collections

Department of Industrial Engineering, Article

Suggestions

OpenMETU
Core

Dynamic Lead-Time Quotation for an M/M/1 Base-Stock Inventory Queue Savaşaneril Tüfekci, Seçil; Keskinocak, Pinar (2010-03-01) We study a dynamic lead-time quotation problem in a base-stock inventory system characterized by lead-time sensitive Poisson demand and exponentially distributed service times. We show that the optimal profit is unimodal in the base-stock level. We compare the base-stock system with a make-to-order (MTO) system and show that the lead-time quotes are lower in an MTO system and that increasing the base-stock level does not necessarily decrease the expected number of customers waiting. Numerical results show t...
Optimal production and inventory policies of priority and price-differentiated customers Duran, Serhan; SİMCHİ-LEVİ, David; Swann, Julie L. (2007-01-01) 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 ratio...
Robust parameter design of products and processes with an ordinal categorical response using random forests Gülbudak Dil, Seçil; Köksal, Gülser; Department of Industrial Engineering (2018) In industrial organizations, manufacturers aim to achieve target product performance with minimum variation. For that reason, finding optimal settings of product and process design parameters that make it possible to consistently achieve target product performance is an important design problem. In this study, we propose an alternative method to solve this problem for the case of an ordinal categorical product/process response. The method utilizes Random Forest (RF) for modelling mean and variance of the re...
Assessing Software Processes over a New Generic Software Process Assessment Tool YÜRÜM, OZAN RAŞİT; Özcan Top, Özden; DEMİRÖRS, ONUR (2017-08-01) Performing process improvement to deliver qualified products with the expected cost on time has been a requirement for organizations targeting to be successful in the software market. Software organizations usually perform process improvement based on well-known process assessment frameworks such as CMMI and ISO/IEC 15504. A number of derivatives of CMMI and ISO/IEC 15504 have been developed and they are being updated. As a result of this, the software process assessment tool based on them needs to be updat...
Solution approaches for flexible job shop scheduling problems Balcı, Şerife Aytuğ; Azizoğlu, Meral; Oğuzsoy, Cemal Berk; Department of Industrial Engineering (2013) In this thesis, we consider a flexible job shop scheduling problem existing in discrete parts manufacturing industries. We are motivated by the production environment of Roketsan Missiles Industries Incorporation, operating at Turkish defense industry. Our objective is to minimize the total weighted completion times of the jobs in the system. We formulate the problem as a mixed integer linear program and find that our model could find optimal solutions only to small sized problem instances. For medium and l...

Citation Formats

S. Savaşaneril Tüfekci and E. Sayin, “Dynamic lead time quotation under responsive inventory and multiple customer classes,” OR SPECTRUM, pp. 95–135, 2017, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/33310.