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A Model for Demand Planning in Supply Chains with Congestion Effects

Author

Listed:
  • Uday Venkatadri

    (Department of Industrial Engineering, Dalhousie University, Halifax, NC B3H 4R3, Canada)

  • Shentao Wang

    (Michael Kors Hong Kong, Hong Kong, China)

  • Ashok Srinivasan

    (Marshall School of Business, University of Southern California, Los Angeles, CA 90089, USA)

Abstract

This paper is concerned with demand planning for internal supply chains consisting of workstations, production facilities, warehouses, and transportation links. We address the issue of how to help a supplier firmly accept orders and subsequently plan to fulfill demand. We first formulate a linear aggregate planning model for demand management that incorporates elements of order promising, recipe run constraints, and capacity limitations. Using several scenarios, we discuss the use of the model in demand planning and capacity planning to help a supplier firmly respond to requests for quotations. We extend the model to incorporate congestion effects at assembly and blending nodes using clearing functions; the resulting model is nonlinear. We develop and test two algorithms to solve the nonlinear model: one based on inner approximation and the other on outer approximation.

Suggested Citation

  • Uday Venkatadri & Shentao Wang & Ashok Srinivasan, 2021. "A Model for Demand Planning in Supply Chains with Congestion Effects," Logistics, MDPI, vol. 5(1), pages 1-24, January.
    • Handle: RePEc:gam:jlogis:v:5:y:2021:i:1:p:3-:d:475745
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