Optimal Expediting Policies for a Serial Inventory System with Stochastic Lead Time and Visibility of Orders in Transit
Name
Simchi-Levi_Optimal expediting.pdf
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441.62 KB
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Checksum (MD5)
474a307ee9f6c22f243b00f70ed7cf11
Author(s)
Kim, Chiwon
Klabjan, Diego
Simchi-Levi, David
Alternative Title
Optimal Expediting Policies for a Serial Inventory System with Stochastic Lead Time
Date Issued
March 2015
Journal
Production and Operations Management
Publisher
Wiley Blackwell
Citation
Kim, Chiwon, Diego Klabjan, and David Simchi-Levi. “Optimal Expediting Policies for a Serial Inventory System with Stochastic Lead Time.” Prod Oper Manag 24, no. 10 (March 2, 2015): 1524–1536.
Version
Author's final manuscript
Abstract
In recent supply chains, often operating multiple delivery modes such as standard freight shipping and air is an effective way of addressing both delivery lead time uncertainties and service rates. We propose a model on how to optimally operate multiple delivery modes. We consider a serial supply chain and an expediting option from intermediate installations to the downstream of the chain. The goods move stochastically among the installations and the system faces a stochastic demand. We identify systems that yield simple optimal policies, in which both regular ordering and expediting follow a variant of the base stock policy. Expediting allows the system to be leaner due to the reduced regular order amount. In addition, we provide managerial insights linking expediting, base stock levels, and expediting costs based on analytical and numerical results.
MIT Department
Massachusetts Institute of Technology. Department of Civil and Environmental Engineering
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/poms.12344
