Integrated safety stock optimization for multiple sourced stockpoints facing variable demand and lead time

International Journal of Production Economics

Volumn 135, Issue 1, 2012, Pages 299-307

  Osman, Hany ^a   Demirli, Kudret ^a  

^a Gina Cody School of Engineering and Computer Science   (Canada)

Author keywords

Benders decomposition technique; Order statistics; Safety stock; Supply chain; Variable demand and lead time

Indexed keywords

BENDERS DECOMPOSITION; CONSOLIDATION MODEL; COST SAVING; DECENTRALIZED MODELS; DOWNSTREAM DEMAND; END CUSTOMERS; FILL RATE; GLOBAL SUPPLY CHAIN; LEAD TIME DEMANDS; LEADTIME; MULTI-STAGE; NON-LINEARITY; ORDER STATISTICS; SAFETY STOCK; SAFETY STOCK PLACEMENT; VARIABLE DEMANDS;

SUPPLY CHAINS;

SUPPLY CHAIN MANAGEMENT;

EID: 80055031868     PISSN: 09255273     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.ijpe.2011.08.004     Document Type: Article

References (68)

1. R.H. Ballou, and A. Burnetas Planning multiple location inventories Journal of Business Logistics 24 2 2003 65 89
2. R.H. Ballou Expressing inventory control policy in the turnover curve Journal of Business Logistics 26 2 2005 143 164
3. G. Blom Statistical Estimates and Transformed Beta-Variables 1958 John Wiley and Sons, Inc. New York
4. Y. Boulaksil, J.C. Fransoo, and N.G. Ernico Setting safety stocks in multi-stage inventory systems under rolling horizon mathematical programming models OR Spectrum 31 1 2009 121 140
5. R.G. Brown Decision rules for inventory management 1967 Holt, Rinehart and Winston New York
6. F. Caron, and G. Marchet The impact of inventory centralization/ decentralization on safety stock for two-echelon systems Journal of Business Logistics 17 1 1996 233 257
7. C.E. Clark The greatest of a finite set of random variables Operations Research 9 1961 145 162
8. J. Clausen, and S. Ju A hybrid algorithm for solving the economic lot and delivery scheduling problem in the common cycle case European Journal of Operational Research 175 2 2006 1141 1150
9. G. Codato, and M. Fischetti Combinatorial benders cuts for mixed-integer linear programming Operations Research 54 4 2006 756 766
10. C. Das, and R. Tyagi Effect of correlated demands on safety stock centralization: patterns of correlation versus degree of centralization Journal of Business Logistics 20 1 1999 205 213
11. H.A. David, and H.N. Nagaraja Order Statistics Third ed. 2003 Wiley InterScience NJ
12. G.D. Eppen, and R.K. Martin Determining safety stock in the presence of stochastic lead time and demand Management Science 34 11 1988 1380 1390
13. M. Ettl, G.E. Feigin, G.Y. Lin, and D.D. Yao A supply network model with base-stock control and service requirements Operations Research 48 2 2000 216 232
14. P.T. Evers Expanding the square root law: an analysis of both safety and cycle stocks The Logistics and Transportation Review 31 1 1995 1 20
15. P.T. Evers, and F.J. Beier The portfolio effect and multiple consolidation points: a critical assessment of the square root law Journal of Business Logistics 14 2 1993 109 125
16. P.T. Evers, and F.J. Beier Operational aspects of inventory consolidation decision making Journal of Business Logistics 19 1 1998 173 189
17. Federer, W.T. 1951. Evaluation of Variance Components from a Group of Experiments with Multiple Classifications. Iowa Agricultural Experiment Station Research Bulletin, No. 380.
18. R. Fourer, D.M. Gay, and B.W. Kernighan AMPL: A Modeling Language for Mathematical Programming Second edition 2003 Thomson Learning California
19. A.M. Geoffrion Generalized Benders decomposition Journal of Optimization Theory and Applications 10 4 1972 237 260
20. S.M.T.F. Ghomi, S.A. Torabi, and B. Karimi A hybrid genetic algorithm for the finite horizon economic lot and delivery scheduling in supply chains European Journal of Operational Research 173 1 2006 173 189
21. H.J. Godwin Some low moments of order statistics Annals of Mathematical Statistics 20 1949 279 285
22. S.C. Graves, and E. Lesnaia Optimizing Safety Stock Placement in General Network Supply Chains Innovation in Manufacturing Systems and Technology (IMST) 2004 1
23. S.C. Graves, and S.P. Willems Optimizing strategic safety stock placement in supply chains Manufacturing and Service Operations Management 2 1 2000 68 83
24. J. Hahm, and C.A. Yano The economic lot and delivery scheduling problem: the single item case International Journal of Production Economics 28 2 1992 235 252
25. J. Hahm, and A.C. Yano Economic lot and delivery scheduling problem: the common cycle case IIE Transactions 27 2 1995 113 125
26. J. Hahm, and A.C. Yano Economic lot and delivery scheduling problem: models for nested schedules IIE Transactions 27 2 1995 126 139
27. J. Hahm, and A.C. Yano Economic lot and delivery scheduling problem: powers of two policies Transportation Science 29 3 1995 222 241
28. H.L. Harter Expected values of normal order statistics Biometrika 48 1 and 2 1961 151 165
29. J.C. Hayya, T.P. Harrison, and D.C. Chatfield A solution for the intractable inventory model when both demand and lead time are stochastic International Journal of Production Economics 122 2009 595 605
30. K. Inderfurth Safety stock optimization in multi-stage inventory systems International Journal of Production Economics 24 1991 103 113
31. K. Inderfurth, and S. Minner Safety stocks in multi-stage inventory systems under different service measures European Journal of Operational Research 106 1998 57 73
32. M.T. Jensen, and M. Khouja An optimal polynomial time algorithm for the common cycle economic lot and delivery scheduling problem European Journal of Operational Research 156 2 2004 305 311
33. Y.J. Jung, G. Blau, J.F. Pekny, G.V. Reklaitis, and D. Eversdyk Integrated safety stock management for multi-stage supply chains under production capacity constraints Computer and Chemical Engineering 32 11 2008 2570 2581
34. P. Kelle, and A.M. Miller Stockout risk and order splitting International Journal of Production Economics 71 2001 407 415
35. M. Khouja Synchronization in supply chains: implications for design and management Journal of the Operational Research Society 54 9 2003 984 994
36. M. Khouja The economic lot and delivery scheduling problem: common cycle, rework, and variable production rate IIE Transactions 32 8 2000 715 725
37. M. Khouja, Z. Michalewicz, and P. Vijayaragavan Evolutionary algorithm for economic lot and delivery scheduling problem Fundamenta Informaticae 35 14 1998 113 123
38. C.O. Kim, J. Jun, J.K. Baek, R.L. Smith, and Y.D. Kim Adaptive inventory control models for supply chain management International Journal of Advanced Manufacturing Technology 26 2005 1184 1192
39. T. Kim, Y. Hong, and S.Y. Chang Joint economic procurement-production- delivery policy for multiple items in a single-manufacturer, multiple-retailer system International Journal of Production Economics 103 1 2006 199 208
40. M.A. Louly, and A. Dolgui Calculating safety stocks for assembly systems with random component procurement lead times: a branch and bound algorithm European Journal of Operational Research 199 2009 723 731
41. S. Minner Dynamic programming algorithms for multi-stage safety stock optimization OR Spektrum 19 1997 261 271
42. M.M. Mahmoud Optimal inventory consolidation schemes: a portfolio effect analysis Journal of Business Logistics 13 1 1992 193 214
43. D.H. Maister Centralization of inventories and the 'square root law' International Journal of Physical Distribution & Materials Management 6 3 1976 124 134
44. H. Osman, and K. Demirli A bilinear goal programming model and a modified Benders decomposition algorithm for supply chain reconfiguration and supplier selection International Journal of Production Economics 124 2010 97 105
45. Osman, H., 2011. Supply chain reconfiguration and inventory integration in a stochastic environment. Ph.D. Dissertation. Department of Mechanical and Industrial Engineering, Concordia University, Canada.
46. Ozturk, A., Aly, E.A.A., 1991. Simple approximation for the moments of normal order statistics. In: Proceedings of the Frontiers of Statistical Computation, Simulation and Modeling. The First International Conference on Statistical Computing, vol. 1, pp. 151170.
47. Pan, A.C., 1987. An investigation of order-splitting in an (s, Q) inventory system where unit demand is constant and lead time variable. Ph.D. Dissertation. Pennsylvania State University.
48. A.C. Pan, R.V. Ramasesh, J.C. Hayya, and J.K. Ord Multiple sourcing: the determination of lead times Operations research letters. 10 1 1991 1 7
49. A. Persona, D. Battini, R. Manzini, and A. Pareschi Optimal safety stock levels of subassemblies and manufacturing components International Journal of Production Economics 110 12 2007 147 159
50. R.V. Ramasesh, J.K. Ord, J.C. Hayya, and A. Pan Sole versus dual sourcing in stochastic lead-time (s, Q) inventory models Management Science 37 4 1991 428 443
51. J.S. Ramberg, and B.W. Schmeiser An approximation method for generating symmetric random variables Communications of the Association for Computing Machinery, Inc 17 1972 78 82
52. L.W. Robinson, J.R. Bradley, and L.J. Thomas Consequences of order crossover under order-up-to inventory policies Manufacturing and Service Operations Management 3 3 2001 175 188
53. J.P. Royston Algorithms AS 177. Expected normal order statistics; exact and approximate Journal of the royal statistical society. Series C (Applied statistics) 31 2 1982 161 165
54. G.K.D. Saharidis, V.S. Kouikoglou, and Y. Dallery Centralized and decentralized control polices for a two-stage stochastic supply chain with subcontracting International Journal of Production Economics 117 1 2009 117 126
55. D. Simchi-Levi, and Z. Yao Safety stock positioning in supply chains with stochastic lead times Manufacturing and Service Operations Management 7 4 2005 295 318
56. Schmeiser, B.W., 1977. Methods for modeling and generating probabilistic components in digital computer simulation when the standard distributions are not adequate: a survey. In: Proceedings of the IEEE Proceeding of the 1977 Winter Simulation Conference, pp. 51-57.
57. D. Sculli, and S.Y. Wu Stock control with two suppliers and normal lead times Journal of the operational research society 32 11 1981 1003 1009
58. K. Simpson In-process inventories Operations Research 6 1958 863 873
59. Sitompul, C., Aghezzaf, E., 2006. Designing of Robust supply networks: the safety stock placement problem in capacitated supply chains. In: Proceedings of the International Conference on Service Systems and Service Management, vol. 1, pp. 203209.
60. C. Sitompul, E. Aghezzaf, W. Dullaert, and H. Van Landeghem Safety stock placement problem in capacitated supply chains International Journal of Production Research 46 17 2008 4709 4727
61. W.J. Tallon The impact of inventory centralization on aggregate safety stock: the variable supply lead time case Journal of Business Logistics 14 1 1993 87 100
62. D. Teichroew Tables of expected values of order statistics and products of order statistics for samples of size twenty and less from the normal distribution Annals of Mathematical Statistics 27 2 1956 410 426
63. R.J. Tersine Principles of Inventory and Materials Management Third ed. 1988 North-Holland
64. S.A. Torabi, and M. Jenabi Multiple cycle economic lot and delivery-scheduling problem in a two-echelon supply chain International Journal of Advanced Manufacturing Technology 43 7-8 2009 785 798
65. R. Tyagi, and C. Das Extension of the square root law for safety stock to demands with unequal variances Journal of Business Logistics 19 2 1998 197 203
66. P.F. Wanke Consolidation effects and inventory portfolios Transportation Research Part E 45 2009 107 124
67. B. Westcott Algorithm AS 118; approximate rankits Applied Statistics 26 1977 362 364
68. W. Zinn, M. Levy, and D.J. Bowersox Measuring the effect of inventory centralization / decentralization on aggregate safety stock: the 'square root law' revisited Journal of Business Logistics 10 1 1989 1 14