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Optimal Control of Basic Integrated Supply Chains

  • Dong-Ping SongEmail author
Chapter
Part of the Advances in Industrial Control book series (AIC)

Abstract

This chapter seeks the optimal joint ordering and production control in an integrated supply chain consisting of a supplier, a manufacturer, and a customer by minimizing the expected sum of material and product holding costs and demand backordering costs subject to finite capacitated warehouses. With the assumptions of exponential replenishment lead times, exponential processing times, Poisson demand arrivals, and at most one outstanding order with its size changeable at any time, it is shown that the optimal joint policy can be characterized by two monotonic switching curves. The optimal ordering decision follows a set of order-up-to-point policies, while the optimal production decision follows a set of base-stock policies. The asymptotic behaviors of the switching curves are established. This chapter also discusses the interpretation and extension of the model and other practical issues such as information sharing, channel coordination, and cost and benefit sharing in supply chain management.

Keywords

Supply Chain Channel Member Bullwhip Effect Supply Chain System Switching Curve 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag London 2013

Authors and Affiliations

  1. 1.School of ManagementUniversity of PlymouthPlymouthUK

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