Competition under capacitated dynamic lot-sizing with capacity acquisition
AbstractLot-sizing and capacity planning are important supply chain decisions, and competition and cooperation affect the performance of these decisions. In this paper, we look into the dynamic lot-sizing and resource competition problem of an industry consisting of multiple firms. A capacity competition model combining the complexity of time-varying demand with cost functions and economies of scale arising from dynamic lot-sizing costs is developed. Each firm can replenish inventory at the beginning of each period in a finite planning horizon. Fixed as well as variable production costs incur for each production setup, along with inventory carrying costs. The individual production lots of each firm are limited by a constant capacity restriction, which is purchased up front for the planning horizon. The capacity can be purchased from a spot market, and the capacity acquisition cost fluctuates with the total capacity demand of all the competing firms. We solve the competition model and establish the existence of a capacity equilibrium over the firms and the associated optimal dynamic lot-sizing plan for each firm under mild conditions.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Production Economics.
Volume (Year): 131 (2011)
Issue (Month): 2 (June)
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Web page: http://www.elsevier.com/locate/ijpe
Game theory Capacity optimization Competition Lot-sizing Approximation Equilibrium;
Other versions of this item:
- Hongyan Li & Joern Meissner, 2006. "Competition under Dynamic Lot Sizing Costs with Capacity Acquisition," Working Papers MRG/0006, Department of Management Science, Lancaster University, revised Apr 2010.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
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