Now or Later: A Simple Policy for Effective Dual Sourcing in Capacitated Systems

We examine a possibly capacitated, periodically reviewed, single-stage inventory system where replenishment can be obtained either through a regular fixed lead time channel, or, for a premium, via a channel with a smaller fixed lead time. We consider the case when the unsatisfied demands are backordered over an infinite horizon, introducing the easily implementable, yet informationally rich dual-index policy. We show very general separability results for the optimal parameter values, providing a simulation-based optimization procedure that exploits these separability properties to calculate the optimal inventory parameters within seconds. We explore the performance of the dual-index policy under stationary demands as well as capacitated production environments, demonstrating when the dual-sourcing option is most valuable. We find that the optimal dual-index policy mimics the behavior of the complex, globally optimal state-dependent policy found via dynamic programming: the dual-index policy is nearly optimal (within 1% or 2%) for the majority of cases, and significantly outperforms single sourcing (up to 50% better). Our results on optimal dual-index parameters are generic, extending to a variety of complex and realistic scenarios such as nonstationary demand, random yields, demand spikes, and supply disruptions

Extensions to the dynamic requirements planning model

"April 1998."Includes bibliographical references (p. 32).by John Ruark

Optimal expediting decisions in a continuous-stage serial supply chain

In 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.lead-time management; optimal control; unit-tracking decomposition;

Tactical Shipping and Scheduling at Polaroid with Dual Lead-Times

We report on a project with Polaroid Corporation in which we developed a supply chain model to provide decision support for planning production and transportation. Production occurs in Asia to serve world-wide demand. Production planners must determine both the production quantities as well as whether to ship by sea or by air. We develop a model to optimize a static version of this problem and then show how to use this static model in a dynamic setting. We test the model with data from Polaroid and show its effectiveness.Singapore-MIT Alliance (SMA

Newsvendor bounds and heuristics for serial supply chains with regular and expedited shipping

We study an infinite-horizon, N -stage, serial production/inventory system with two transportation modes between stages: regular shipping and expedited shipping. The optimal inventory policy for this system is a top–down echelon base-stock policy, which can be computed through minimizing 2 N nested convex functions recursively (Lawson and Porteus, Oper Res 48 (2000), 878–893). In this article, we first present some structural properties and comparative statics for the parameters of the optimal inventory policies, we then derive simple, newsvendor-type lower and upper bounds for the optimal control parameters. These results are used to develop near optimal heuristic solutions for the echelon base-stock policies. Numerical studies show that the heuristic performs well. © 2009 Wiley Periodicals, Inc. Naval Research Logistics, 2010Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/64894/1/20388_ftp.pd

Redressing the Silent Interim: Precautionary Action & Short Term Tests in Toxicological Risk Assessment

The author recommends that a stronger emphasis be placed on creating and implementing short-term tests that use iterative, conservative-based, tiered procedures in conjunction with a precautionary attitude during the interim phase of toxicological risk assessments