IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Assessing the value of early order commitment for supply chains with (s, S) policies and lost sales

  • Xiaoying Hu
  • Jinxing Xie
Registered author(s):

    Early order commitment (EOC) is one of the strategies for supply chain coordination, wherein a retailer places its orders to a supplier in advance, i.e., the retailer's ordering lead time is longer than the regular delivery time from the supplier to the retailer. This paper explores the value of practicing EOC in a supply chain with demand uncertainty and lost sales. It also examines the impact of forecasting errors and inventory policies used by the retailers on the performance of the supply chain. The methodology adopted in this study is computer simulation. Analyses of the simulation outputs show that: 1) using the periodical review (s, S) policy can reduce the cost of the supply chain in many environments compared to deterministic lot-sizing rules such as the economic order quantity rule, the periodic order quantity rule and the Silver-Meal rule; 2) the EOC strategy can generate significant cost savings for the whole supply chain when the retailers' forecasting errors are not too large or the supplier's forecasting horizon is relatively long. However, the advantage of EOC disappears when the forecasting errors are large and the supplier's forecasting horizon is very short. Sensitivity analyses show that these findings are robust with respect to the supply chain's cost structure and the supplier's production lead time.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Applied Management Science.

    Volume (Year): 2 (2010)
    Issue (Month): 3 ()
    Pages: 205-223

    in new window

    Handle: RePEc:ids:injams:v:2:y:2010:i:3:p:205-223
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ids:injams:v:2:y:2010:i:3:p:205-223. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Graham Langley)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.