Optimal expediting decisions in a continuous-stage serial supply chain
AbstractIn this paper, we analyze expediting decisions in a continuous-time, continuous-stage serial supply chain facing a Poisson demand process. For each unit in the chain, one must decide at which speed it should be moved downstream, given the state of the system, so as to minimize total supply chain costs. We decompose the problem into a set of one-dimensional subproblems that can be easily solved and characterize the optimal expediting policy: under quite general assumptions, the optimal speed of a given unit accelerates upstream, and then slows down downstream. We finally provide a case study where we estimate the benefits of expediting compared to a fixed transportation speed and show them to be significant.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/906.
Length: 31 pages
Date of creation: 03 Feb 2011
Date of revision:
lead-time management; optimal control; unit-tracking decomposition;
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