Title: Deriving the cost function of an integrated dyadic supply chain with uncertainty in the supply

Authors: S. Mehdi Sajadifar; Behrooz Pourghannad

Addresses: Department of Industrial Engineering, University of Science and Culture, Park Avenue, Ashrafi e Esfahani Blvd., Tehran, Iran ' Department of Industrial Engineering, University of Science and Culture, Park Avenue, Ashrafi e Esfahani Blvd., Tehran, Iran

Abstract: This paper considers a dyadic supply chain with an uncertain supplier. Both the retailer and the supplier use continuous review policy. The supplier is randomly available for supplying the retailer. The retailer faces Poisson demands. In this system, lead time is a random variable consists of a constant transportation time plus a random delay occurs due to availability of stock at the supplier. In this paper, for the first time in the literature, we consider both the integrity and the uncertainty in the above supply chain. The main distinguishing characteristic of this paper, in comparison with the existing literature, is considering simultaneously two main concepts, namely the integration and unreliable supplier, through modelling the problem. We derive a good approximation for the total cost function of described system, using weighted mean costs of the one-for-one ordering policy. Finally, using simulation studies, we show that absolute errors are significantly ignorable.

Keywords: continuous review; Poisson process; supply uncertainty; non-zero lead times; industrial interruptions; supply chain management; SCM; dyadic supply chains; total cost function; simulation.

DOI: 10.1504/IJISE.2012.046661

International Journal of Industrial and Systems Engineering, 2012 Vol.11 No.1/2, pp.154 - 166

Available online: 17 Apr 2012 *

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