Economic manufacturing quantities of components in supply chains
by Arcan Nalça; Haldun Süral; Yigal Gerchak
International Journal of Inventory Research (IJIR), Vol. 2, No. 1/2, 2013

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.

Online publication date: Fri, 25-Jul-2014

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