NDLI: The impact of dampening demand variability in a production/inventory system with multiple retailers (abstract only)

Content Provider	ACM Digital Library
Author	Van Houdt, B. Pérez, J. F.
Abstract	We study a supply chain consisting of a single manufacturer and two retailers. The manufacturer produces goods on a make-to-order basis, while both retailers maintain an inventory and use a periodic replenishment rule. As opposed to the traditional (r, S) policy, where a retailer at the end of each period orders the demand seen during the previous period, we assume that the retailers dampen their demand variability by smoothing the order size. More specifically, the order placed at the end of a period is equal to ß times the demand seen during the last period plus (1?ß) times the previous order size, with ß ? (0, 1] the smoothing parameter. We develop a GI/M/1-type Markov chain with only two nonzero blocks $A_{0}$ and $A_{d}$ to analyze this supply chain. The dimension of these blocks prohibits us from computing its rate matrix R in order to obtain the steady state probabilities. Instead we rely on fast numerical methods that exploit the structure of the matrices $A_{0}$ and $A_{d},$ i.e., the power method, the Gauss-Seidel iteration and GMRES, to approximate the steady state probabilities. Finally, we provide various numerical examples that indicate that the smoothing parameters can be set in such a manner that all the involved parties benefit from smoothing. We consider both homogeneous and heterogeneous settings for the smoothing parameters.
Starting Page	30
Ending Page	30
Page Count	1
File Format	PDF
ISSN	01635999
DOI	10.1145/2185395.2185421
Journal	ACM SIGMETRICS Performance Evaluation Review (PERV)
Volume Number	39
Issue Number	4
Language	English
Publisher	Association for Computing Machinery (ACM)
Publisher Date	2014-01-10
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Content Type	Text
Resource Type	Article
Subject	Computer Networks and Communications Hardware and Architecture Software

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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