scholarly journals Capturing the Risk-Pooling Effect through Inventory Planning and Demand Switching

2018 ◽  
Vol 10 (11) ◽  
pp. 4104 ◽  
Author(s):  
Hsun Chuan Cho ◽  
Ying Jiun Hsieh ◽  
Lan Ying Huang
Keyword(s):  
Demand Uncertainty ◽  
Competitive Bidding ◽  
Lead Times ◽  
Inventory Planning ◽  
Switching Rate ◽  
Risk Pooling ◽  
Numerical Examples ◽  
Inventory Costs ◽  
Present Context ◽  
Outsourcing Strategies

This paper demonstrates how firms can deal with demand uncertainty through inventory planning and demand switching, which take advantage of the risk-pooling effect and contribute to supply-chain sustainability. Considering two types of products and two outsourcing strategies (competitive bidding, and consignment stock under the (Q, R) inventory policy with variable lead times), the study helps determine the appropriate outsourcing strategy when a firm practices demand switching. Under certain conditions, the study further identifies the proper demand-switching direction and optimum switching-rate to achieve the minimum total purchase and inventory costs in association with outsourcing. Prior research generally implies that demand switching increases costs or profit benefits. This implication, however, does not hold true in the present context. The study presents numerical examples to illustrate the derived models. The findings enrich the extant literature by incorporating demand switching into the outsourcing practices, which is beneficial to both practitioners and scholars.

The Choice of Different Logistics Policies Considering Transportation and Inventory Costs in a Two-Echelon Distribution System

2014 ◽  
Vol 505-506 ◽  
pp. 902-906
Author(s):  
Pin Lv ◽  
Cheng Zheng Ma
Keyword(s):  
Distribution System ◽  
Demand Uncertainty ◽  
Formal Analysis ◽  
Cost Difference ◽  
Inventory Cost ◽  
Inventory Costs ◽  
Decentralization Policy ◽  
The Relationship ◽  
Centralization And Decentralization ◽  
Customer Orders

This paper presented a formal analysis for the alternative of logistics centralization and decentralization policy in a two-echelon distribution system. First, functions of transportation and inventory costs under different policies in the system were developed. Second, the differences between transportation and inventory costs were compared, and the relationship between transportation and inventory cost difference was analyzed through a balance ratio. At last, some indicators were derived to measure the level of demand uncertainty, the amount of retailers and the size of customer orders. It shows that the optimal logistics policy can be determined as a tradeoff between transportation and inventory costs. And the indicators can provide a basis for selecting the optimal logistics policy.

scholarly journals Transmission Expansion Planning under Uncertainty for Investment Options with Various Lead-Times

Energies ◽  
2018 ◽  
Vol 11 (9) ◽  
pp. 2429 ◽  
Author(s):  
Wook-Won Kim ◽  
Jong-Keun Park ◽  
Yong-Tae Yoon ◽  
Mun-Kyeom Kim
Keyword(s):  
Case Studies ◽  
Demand Uncertainty ◽  
Mixed Integer ◽  
Lead Times ◽  
Stage Model ◽  
Expansion Planning ◽  
Transmission Expansion Planning ◽  
Transmission Expansion ◽  
Multi Stage ◽  
Relative Standard

Investment options of transmission expansion planning (TEP) involve different lead times according to their length, technology, and environmental and social impacts. TEP planners can utilize the various lead times to deal with the risk of uncertainty. This paper proposes a novel framework for TEP under an uncertain environment, which includes investment options with various lead times. A multi-stage model is developed to reflect the different lead times in the planning method. The level of demand uncertainty is represented using a relative standard deviation. Demand uncertainty in the presented multi-stage model and its influence on the optimal decision are studied. The problem is formulated as a mixed integer linear problem to which stochastic programming is applied, and the proposed framework is illustrated from case studies on a modified Garver’s six-bus system. The case studies verify the effectiveness of the framework for TEP problems with a mathematically tractable model and demonstrates that the proposed method achieves better performance than other methods when the problems involve investment candidates with various lead times under uncertain conditions.

scholarly journals Hybrid Transshipment Policy and Ordering Model for Multiple Periods with Customer Switching Behaviour

2021 ◽  
Vol 2021 ◽  
pp. 1-14
Author(s):  
Qingren He ◽  
Ranran Shi ◽  
Guofeng Tang
Keyword(s):  
Programming Model ◽  
The Other ◽  
Switching Rate ◽  
Model Framework ◽  
Numerical Examples ◽  
Time Dynamic ◽  
Switching Behaviour ◽  
Customer Switching ◽  
Dynamic Programming Model ◽  
The Impact

The interaction of a hybrid transshipment policy and customer switching behaviour will exacerbate the complexity of the structure of a hybrid transshipment policy. To cope with this problem, a discrete-time dynamic programming model framework with customer switching behaviour is developed. Based on this framework, we demonstrate that the retailer can obtain more profits with a hybrid transshipment than without one. Next, the existence of a reactive and preventive transshipment policy is shown, respectively. We further analyse the structural property of the holdback policy of reactive transshipment and give the threshold of customer switching rate when always rejecting the request. Meanwhile, a dominant preventive transshipment policy is formulated by which the retailer can control the inventory regardless of the influence of the preventive transshipment policy of the other as long as the inventory is observed by developing an easy-to-implement optimal hybrid transshipment strategy. In addition, the existence of an ordering Nash equilibrium of two retailers is proven. Then, we also illustrate the existence of a transshipment area and analyse the impact of the transshipment cost and switching rate on ordering, the hybrid transshipment policy, and profit by using numerical examples. Finally, we find that the retailer is more willing to adjust inventory by ordering when there is a lower transshipment price and adjust inventory by hybrid transshipment when there is a higher transshipment price.

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