Newsvendor problem with multiple unreliable suppliers

Date

2014-01-02

Author

Merzifonluoglu, Yasemin
Feng, Yazhe

Metadata

Show full item record

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

Item Usage Stats

176
views

0
downloads

This paper focuses on supplier-related decisions in a newsvendor setting. We build upon the current literature by analysing the newsvendor problem with multiple unreliable and non-identical suppliers. We also incorporate both fixed ordering costs and capacity limits for supplier selection. We develop an exact algorithm to solve the problem optimally and a heuristic algorithm to solve the problem efficiently. Through structural properties of the optimal solution and a numerical study, we provide useful managerial implications regarding optimal sourcing strategies in complex supply chains. Previous literature concludes that with multiple unreliable (independent) suppliers, cost is the order qualifier and reliability is the order winner. We found that when fixed ordering costs and supply capacities exist, this insight no longer holds. We also examine the sensitivity of the sourcing decisions to supplier capacity levels, demand uncertainty, salvage value and shortage cost. Our results show that high levels of demand uncertainty lead firms to turn to a single-sourcing strategy whereas high salvage values and high shortage cost suggest multi-sourcing strategy.

Subject Keywords

Management Science and Operations Research, Strategy and Management, Industrial and Manufacturing Engineering

URI

https://hdl.handle.net/11511/65481

Journal

INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH

DOI

https://doi.org/10.1080/00207543.2013.835497

Collections

Economics and Administrative Sciences, Article

Suggestions

OpenMETU
Core

A survey on OR and mathematical methods applied on gene-environment networks Weber, Gerhard Wilhelm; Kropat, Erik; Öztürk, Başak; Gorgulu, Zafer-Korcan (Springer Science and Business Media LLC, 2009-09-01) In this paper, we survey the recent advances and mathematical foundations of gene-environment networks. We explain their interdisciplinary implications with special regard to human and life sciences as well as financial sciences. Special attention is paid to applications in Operational Research and environmental protection. Originally developed in the context of modeling and prediction of gene-expression patterns, gene-environment networks have proved to provide a conceptual framework for the modeling of dy...
A Multi-Attribute Assignment Goal-Programming Model with Incentives Saatçioğlu, Ömer (JSTOR, 1987-4) A multi-attribute assignment goal-programming model is developed in this paper for the selection and assignment of transfer personnel. Attributes and incentives are used to select the correct type of people from surplus personnel and assign them to vacant positions. The model is illustrated in a simple, exemplary case problem, and the results are interpreted. The model is solved by using a sequential linear goal-programming algorithm and a mixed-integer programming subroutine.
LOT STREAMING IN A 2-STAGE FLOW-SHOP WITH SET-UP, PROCESSING AND REMOVAL TIMES SEPARATED CETINKAYA, FC (Informa UK Limited, 1994-12-01) This paper considers the job (lot) scheduling problem for two-stage flow shops in which the movement of transfer batches (sublots) from the first stage to the next are allowed. Set-up, processing and removal times are considered as separable and independent of the order in which jobs are processed at any of two stages. An optimal transfer batch sizing and scheduling algorithm which has an objective of minimizing the maximum flow time (makespan) is developed and demonstrated by a numerical example.
The multi-resource agent bottleneck generalised assignment problem Karsu, Ozlem; Azizoğlu, Meral (Informa UK Limited, 2012-01-01) In this study, we consider the multi resource agent bottleneck generalised assignment problem. Our aim is to minimise the maximum load over all agents. We take our motivation from an assignment problem faced in heating, ventilating and air conditioning sector. We study the linear programming (LP) relaxation of the problem. We use the optimal LP relaxation solutions in our branch and bound algorithm while defining bounding and branching schemes. We find that our branch and bound algorithm returns optimal sol...
Mixed integer programming-based solution procedure for single-facility location with maximin of rectilinear distance Nadirler, D.; Karasakal, Esra (Informa UK Limited, 2008-04-01) In this paper, we study the 1-maximin problem with rectilinear distance. We locate a single undesirable facility in a continuous planar region while considering the interaction between the facility and existing demand points. The distance between facility and demand points is measured in the rectilinear metric. The objective is to maximize the distance of the facility from the closest demand point. The 1-maximin problem has been formulated as an MIP model in the literature. We suggest new bounding schemes t...

Citation Formats

Y. Merzifonluoglu and Y. Feng, “Newsvendor problem with multiple unreliable suppliers,” INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH, pp. 221–242, 2014, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/65481.