|Ph.D Student||Smirnov Dina|
|Subject||Leveraging In-Cycle Demand Information to Maximize|
Profit in a Single-Period Framework
|Department||Department of Industrial Engineering and Management||Supervisor||Professor Yale Herer|
|Full Thesis text|
Two major changes have affected supply chain management in recent years. The first is the increased product variety accompanied by a shortening of product lifecycles. This resulted in short-term, highly uncertain demand profiles, making single-period inventory models particularly relevant and widely used.
The second change is the recent advancements in Information Technology, which provide decision makers in the supply chain with extensive, accurate, and often real-time, data. Wisely used, this newly available data can assist in improving the performance of the supply chain. For single-period systems, one way to leverage this new information is to perform an additional review of inventory at an endogenously determined, a priori set time during the sales period, essentially creating two sub-periods. Our goal is to utilize this in-cycle sales information to react and address demand fluctuations.
In the current work, we consider three types of inventory systems operating within the single-period framework in which an additional review is allowed. The first type is a single-location system in which at the time of the additional review, an additional replenishment decision can be made. Simultaneously, we optimize the initial order quantity, the timing of the additional review, and the quantity to replenish at the time of the additional review. The novelty of our work is in combining lotsizing decisions with timing decisions. Additionally, we provide a tractable solution algorithm, conduct a numerical study and draw insights about the system.
In the second part of the work, we consider a problem faced by a large, real-world magazine distributor. The magazines are distributed through a network of retailers, and for each retailer in isolation, the problem faced by the distributor is similar to the single-location problem from the first part of the current work. Due to logistical constraints, however, the various locations need to set a common time for the additional review. We solve a multi-location problem with an option of an additional review and production. We optimize the initial printing quantities, the joint timing of the additional review, and the quantities to print at the time of the additional review. Our model was implemented in a pilot field study. Our findings indicate that the proposed model achieves a dramatic increase in the profit compared to the current policy.
Last, we consider the problem of a two-stage supply chain consisting of a single warehouse supplying two identical retailers under an option of an additional review during the sales period. At the beginning of the period, a portion of the stock is held back to be distributed at the time of the additional review. We optimize the initially allocated quantities and the holdback quantity. We explicitly derive the necessary and sufficient optimality conditions for the lotsizing decisions. We perform a sensitivity analysis with respect to the parameters and provide insights. In a numerical analysis, we examine the effect of the additional review timing.