A MULTI-ITEM NEWSVENDOR PROBLEM WITH PRESEASON PRODUCTION AND CAPACITATED REACTIVE PRODUCTION
How should one deal with demand uncertainty for multiple items that have short life cycles or have seasonal demands with concentrated selling seasons? The classic newsvendor formulation does not consider any production capability during the selling season. Ignoring this capability can lead to suboptimal decisions in situations where the production capacity during the selling season is substantial, e.g., the Christmas season. This article develops a two-stage, multi-item model for improving production by using reactive production, i.e., selling season production that employs a firms internal capacity. Production occurs in an un-capacitated preseason stage and a capacitated reactive stage. All demands occur in the reactive stage. Reactive capacities are pre-allocated to each item in the preseason stage and cannot be changed during the reactive stage. Reactive production occurs with full knowledge of demands. The objective is expected profit maximization. Our results include a procedure for determining optimal preseason production quantities and reactive stage capacity allocations, a characterization of prices where reactive capacity is too expensive to use and prices where production should employ only reactive capacity, and a scheme for determining how to optimally increase or decrease the internal capacity level when it is adjustable.
Inventory production and supply chain management
Chia-Shin Chung James Flynn Omer Kirca
Department of Operations Management and Business Statistics Cleveland State University,Cleveland,Ohi Department of Industrial Engineering Middle East Technical University,Ankara,06531 Turkey
国际会议
北京
英文
2007-05-30（万方平台首次上网日期，不代表论文的发表时间）