Integrated supply chain
Vasa Kosadat, Texas Tech University
Date: 2001
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Abstract
In response to the fluctuations in demands and uncertainties within a production chain, companies have resorted to a new approach in inventory and production management called the Supply Chain Management (SCM). Unlike the tradition approach, SCM aims to optimize the cost of the entire production chain, from raw-material suppliers to retailers, rather than focusing on individual costs of companies. Due to the complexity of the problem, a direct approach to the optimal solution is impractical. To overcome this complexity problem, we have developed a heuristic approach, which provides an approximate solution. The proposed heuristic utilizes a commonly known inventory management technique called the power-of-two policy.
Based on the results of the numerical experiment, our heuristic is shown to perform exceptionally well, even as the complexity of the system increases. Apart from the development of our heuristic, another significant contribution to the area of inventory and production management is the construction of a completely integrated supply chain model, which has never been accomplished in previous studies.
Subject Area
ENGINEERING, INDUSTRIAL (0546)
