Title: Economic manufacturing quantities of components in supply chains

Authors: Arcan Nalça; Haldun Süral; Yigal Gerchak

Addresses: Queen's School of Business, Queen's University, Goodes Hall, Kingston, Ontario, K7L 3N6, Canada ' Department of Industrial Engineering, Middle East Technical University, 06800 Ankara, Turkey ' Department of Industrial Engineering, Tel-Aviv University, Tel-Aviv, Israel

Abstract: In this study we consider a simple two level supply chain consisting of an assembler and a group of suppliers producing a single product for a constant external demand rate. Suppliers manufacture the product's components at unequal rates. When all components are available, they are assembled to a finished product. The determination of the lot sizes of the product and its components depends on whether one seeks system optimality, corresponding to a coordinated system, or whether the assembly firm dictates to the suppliers the lot sizes it prefers. We develop a model to compare the effects of coordinated and decentralised decisions on the total cost of the system.

Keywords: inventory control; supply chain management; SCM; coordinated decisions; decentralised decisions; lot sizing; economic manufacturing quantity; EMQ; two level supply chains; component manufacture; modelling.

DOI: 10.1504/IJIR.2013.058340

International Journal of Inventory Research, 2013 Vol.2 No.1/2, pp.44 - 62

Available online: 17 Dec 2013 *

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