American Journal of Operations Management and Information Systems
Volume 4, Issue 1, March 2019, Pages: 26-38
Received: Dec. 4, 2018;
Accepted: Jan. 11, 2019;
Published: Apr. 26, 2019
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Jianhong Yu, School of Business, Jianghan University, Wuhan, China
Jennifer Shang, Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, USA
Wenchyuan Chiang, Collins College of Business, The University of Tulsa, Tulsa, USA
The synchronization and coordination of material flows is a key element in the supply chain management. To analyze the effects of coordinated replenishment for components, we consider an assembly system with two component-suppliers, one supply-hub and one manufacturer, under stochastic final product demand. We propose three different strategies: (i) the decentralized replenishment, (ii) the coordinated replenishment without coordinated quantity, and (iii) the coordinated replenishment policy with coordinated quantity for infinite planning horizon. We propose optimal decisions for all strategies. Results show that policy (ii) is always better than policy (i). We further identify the conditions under which the third strategy outperforms the other two. Policy (iii) is better on cost saving and service level, only when it satisfies certain conditions. Numerical studies are conducted to validate the model and to derive managerial implications.
Coordinated Replenishment Policy in an Assembly System Based on Supply-Hub, American Journal of Operations Management and Information Systems.
Vol. 4, No. 1,
2019, pp. 26-38.
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