Article ID: | iaor20051277 |
Country: | Netherlands |
Volume: | 152 |
Issue: | 3 |
Start Page Number: | 723 |
End Page Number: | 744 |
Publication Date: | Feb 2004 |
Journal: | European Journal of Operational Research |
Authors: | Kim Eungab |
Keywords: | inventory, markov processes, programming: dynamic |
We investigate optimal properties of the replenishment policy for a two-echelon outsourcing system in which a company outsources production of certain products and supplies raw material required to produce those products for its outsourcing partner. The model presented has three distinct features. First, the company is a single decision maker facing replenishment decisions and whose objective is to minimize total system costs. Second, replenishment decisions are made dynamically based on the system status such as demand, production, and delivery processes. Third, a shipment is activated only when