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A Stochastic Sequencing Problem for Style Goods with Forecast Revisions and Hierarchical Structure

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  • Hirofumi Matsuo

    (Department of Management, Graduate School of Business, University of Texas, Austin, Texas 78712)

Abstract

This paper addresses the problem of simultaneously determining a production sequence and production volumes of style goods. Style goods have one selling season per year. During the rest of the year, manufacturers of style goods build up the inventory while continuously reestimating the demand in the final selling season. In this problem, products have a two-stage hierarchy: items and families. The production of a family is assumed to be nonpreemptive. Exploiting the hierarchical structure, we formulate the problem as a two-stage stochastic sequencing problem: the stochastic aggregate sequencing problem and the stochastic disaggregation problem. To solve the stochastic aggregate sequencing problem, a simple heuristic solution procedure is developed that accounts for the forecast revisions and provides a lower bound on the optimal value. The heuristic is tested using the disguised data obtained from a consumer electronics company. The computational results demonstrate the applicability of the proposed procedure.

Suggested Citation

  • Hirofumi Matsuo, 1990. "A Stochastic Sequencing Problem for Style Goods with Forecast Revisions and Hierarchical Structure," Management Science, INFORMS, vol. 36(3), pages 332-347, March.
    • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:3:p:332-347
    DOI: 10.1287/mnsc.36.3.332
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    Citations

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    Cited by:

    1. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. Taskin, Selda & Lodree Jr., Emmett J., 2010. "Inventory decisions for emergency supplies based on hurricane count predictions," International Journal of Production Economics, Elsevier, vol. 126(1), pages 66-75, July.
    3. Serel, Doğan A., 2012. "Multi-item quick response system with budget constraint," International Journal of Production Economics, Elsevier, vol. 137(2), pages 235-249.
    4. Samuel Sale, R. & Mesak, Hani I. & Inman, R. Anthony, 2017. "A dynamic marketing-operations interface model of new product updates," European Journal of Operational Research, Elsevier, vol. 257(1), pages 233-242.
    5. Kogan, Konstantin & Lou, Sheldon, 2003. "Multi-stage newsboy problem: A dynamic model," European Journal of Operational Research, Elsevier, vol. 149(2), pages 448-458, September.
    6. Zotteri, Giulio & Verganti, Roberto, 2001. "Multi-level approaches to demand management in complex environments: an analytical model," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 221-233, May.
    7. K Kogan & V Portougal, 2006. "Multi-period aggregate production planning in a news-vendor framework," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(4), pages 423-433, April.
    8. Voros, Jozsef & Szidarovszky, Ferenc, 2001. "Determining the production order of two seasonal products under capacity constraint," International Journal of Production Economics, Elsevier, vol. 73(2), pages 117-122, September.
    9. Baruah, Pundarikaksha, 2006. "Supply Chains Facing Atypical Demand: Optimal Operational Policies And Benefits Under Information Sharing," MPRA Paper 16101, University Library of Munich, Germany.
    10. Nicholas C. Petruzzi & Maqbool Dada, 2002. "Dynamic pricing and inventory control with learning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(3), pages 303-325, April.
    11. Bitran, Gabriel R. & Tirupati, Devanath., 1989. "Hierarchical production planning," Working papers 3017-89., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    12. Kogan, Konstantin & Herbon, Avi, 2008. "Production under periodic demand update prior to a single selling season: A decomposition approach," European Journal of Operational Research, Elsevier, vol. 184(1), pages 133-146, January.
    13. Wanke, Peter F., 2008. "The uniform distribution as a first practical approach to new product inventory management," International Journal of Production Economics, Elsevier, vol. 114(2), pages 811-819, August.
    14. Voros, Jozsef, 1999. "On the risk-based aggregate planning for seasonal products," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 195-201, March.
    15. Marshall Fisher & Kumar Rajaram & Ananth Raman, 2001. "Optimizing Inventory Replenishment of Retail Fashion Products," Manufacturing & Service Operations Management, INFORMS, vol. 3(3), pages 230-241, November.
    16. Bartezzaghi, Emilio & Verganti, Roberto & Zotteri, Giulio, 1999. "A simulation framework for forecasting uncertain lumpy demand," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 499-510, March.

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