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Optimal replenishment order for uncertain demand in three layer supply chain

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  • Roy, Arpita
  • Sana, Shib Sankar
  • Chaudhuri, Kripasindhu

Abstract

The authors study the well-known order quantity model in a three-player context, using a framework of newsboy problem. An expected average cost function of the chain by trading off inventory cost and shortage costs is formulated which is minimized to obtain optimal order sizes of the supplier, manufacturer and retailer. Our theoretical analysis of both cases; (i) when demand per unit time of each member of the chain is uncertain, (ii) when uncertain demand is distributed uniformly over finite time horizon; suggests the determining of optimal order sizes of the members so that the expected average channel cost is minimum. Numerical examples for different distributions are illustrated to justify our model.

Suggested Citation

  • Roy, Arpita & Sana, Shib Sankar & Chaudhuri, Kripasindhu, 2012. "Optimal replenishment order for uncertain demand in three layer supply chain," Economic Modelling, Elsevier, vol. 29(6), pages 2274-2282.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:6:p:2274-2282
    DOI: 10.1016/j.econmod.2012.07.008
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    References listed on IDEAS

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    Cited by:

    1. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    2. Sarkar, Biswajit & Majumder, Arunava, 2013. "A study on three different dimensional facility location problems," Economic Modelling, Elsevier, vol. 30(C), pages 879-887.
    3. Chiu, Yuan-Shyi Peter & Chang, Huei-Hsin, 2014. "Optimal run time for EPQ model with scrap, rework and stochastic breakdowns: A note," Economic Modelling, Elsevier, vol. 37(C), pages 143-148.
    4. repec:spr:annopr:v:257:y:2017:i:1:d:10.1007_s10479-015-1966-6 is not listed on IDEAS
    5. Tseng, Chao-Tang & Wu, Mei-Fang & Lin, Hong-Dar & Chiu, Yuan-Shyi Peter, 2014. "Solving a vendor–buyer integrated problem with rework and a specific multi-delivery policy by a two-phase algebraic approach," Economic Modelling, Elsevier, vol. 36(C), pages 30-36.
    6. Sarkar, Biswajit & Ganguly, Baishakhi & Sarkar, Mitali & Pareek, Sarla, 2016. "Effect of variable transportation and carbon emission in a three-echelon supply chain model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 91(C), pages 112-128.

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    Keywords

    Newsboy; Supply chain; Inventory; Shortage;

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