Article ID: | iaor20043451 |
Country: | Netherlands |
Volume: | 24 |
Issue: | 3 |
Start Page Number: | 115 |
End Page Number: | 125 |
Publication Date: | Apr 1999 |
Journal: | Operations Research Letters |
Authors: | Srinivasan Ramesh, Swaminathan Jayashankar M. |
Keywords: | stochastic processes |
In recent years management of customer requirements has been the foremost concern of most manufacturers. In this paper, we consider a single-period problem in which the manufacturer faces stochastic demand and individual service level constraints from multiple customers. We present a formulation for the problem that utilizes the structure of the underlying allocation problem and provide an algorithm that generates the optimal procurement quantity under the optimal random allocation policy. For a special case when there are two identical customers and their demand is jointly uniform, we derive an analytical expression for the optimal procurement quantity.