Article ID: | iaor20114414 |
Volume: | 131 |
Issue: | 2 |
Start Page Number: | 473 |
End Page Number: | 482 |
Publication Date: | Jun 2011 |
Journal: | International Journal of Production Economics |
Authors: | Bhatnagar Rohit, Mehta Peeyush, Chong Teo Chee |
Keywords: | scheduling, time series & forecasting methods |
We address the problem of coordinating aggregate planning decisions and short‐term scheduling decisions in supply chains with dual supply modes. We consider long lead time, less expensive sea shipments that are based on demand forecast, and responsive but costly air shipments that are based on revised forecast closer to the demand period. The planning problem determines the sea shipment order quantity and inventory level, while the scheduling model determines the schedule and quantity of air shipments. Results from our numerical experiments suggest that our model leads to consistent cost improvements over a wide range of operating scenarios.