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Centralized admission and production control in a two-stage supply chain with single component and customized products

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  • Kim, Eungab

Abstract

This paper considers a two-stage supply chain that a make-to-stock facility produces a single component in anticipation of future demand and a make-to-order facility produces customized products using components with the option of to accept or reject each customer order. We address the problem of centralizing the admission and production control that maximizes the supply chain's profit subject to the system costs. Using a Markov decision process model, we characterize the structure of the optimal admission control and production policy and establish the monotonic impact of system parameters on the optimal policy. Two heuristics are presented and their performance is numerically compared to the optimal policy under different operating conditions of the system.

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  • Kim, Eungab, 2012. "Centralized admission and production control in a two-stage supply chain with single component and customized products," International Journal of Production Economics, Elsevier, vol. 140(1), pages 530-540.
    • Handle: RePEc:eee:proeco:v:140:y:2012:i:1:p:530-540
    DOI: 10.1016/j.ijpe.2012.07.004
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    References listed on IDEAS

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    1. Albert Y. Ha, 1997. "Inventory Rationing in a Make-to-Stock Production System with Several Demand Classes and Lost Sales," Management Science, INFORMS, vol. 43(8), pages 1093-1103, August.
    2. Li, Hui & Liu, Liming, 2006. "Production control in a two-stage system," European Journal of Operational Research, Elsevier, vol. 174(2), pages 887-904, October.
    3. Ioannidis, Stratos, 2011. "An inventory and order admission control policy for production systems with two customer classes," International Journal of Production Economics, Elsevier, vol. 131(2), pages 663-673, June.
    4. ElHafsi, Mohsen, 2009. "Optimal integrated production and inventory control of an assemble-to-order system with multiple non-unitary demand classes," European Journal of Operational Research, Elsevier, vol. 194(1), pages 127-142, April.
    5. Saif Benjaafar & Mohsen ElHafsi, 2006. "Production and Inventory Control of a Single Product Assemble-to-Order System with Multiple Customer Classes," Management Science, INFORMS, vol. 52(12), pages 1896-1912, December.
    6. Saharidis, Georgios K.D. & Kouikoglou, Vassilis S. & Dallery, Yves, 2009. "Centralized and decentralized control polices for a two-stage stochastic supply chain with subcontracting," International Journal of Production Economics, Elsevier, vol. 117(1), pages 117-126, January.
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    Cited by:

    1. Sagawa, Juliana Keiko & Mušič, Gašper, 2019. "Towards the use of bond graphs for manufacturing control: Design of controllers," International Journal of Production Economics, Elsevier, vol. 214(C), pages 53-72.
    2. Stratos Ioannidis & Alexandros S. Xanthopoulos & Ioannis Sarantis & Dimitrios E. Koulouriotis, 2021. "Joint production, inventory rationing, and order admission control of a stochastic manufacturing system with setups," Operational Research, Springer, vol. 21(2), pages 827-855, June.

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