Abstract: | Sourcing components in a global supplier network can lead to a high degree of uncertainty in the supply process due to various potential glitches such as unexpected supply disruptions, insufficient supplier capacity, incorrect shipment quantities, or transportation delays across borders. For assemble-to-order systems, such supply uncertainty makes the coordination of component procurement difficult and can increase the overall assembly cost of the final product. In this research, we develop an analytical framework to illustrate how supply uncertainty of a component can affect the component procurement strategies of other components in an assemble-to-order system. In particular, we consider an assemble-to-order system where one of the components faces uncertainty in the supply process in which the actual available quantity is equal to some random fraction of the production quantity. We analyze how such supply uncertainty would affect the optimal procurement strategies of the components. We first analyze a centralized system in which the assembler decides the optimal order quantities from the component suppliers. We then extend the analysis to a decentralized system using a vendor-managed inventory contract in which the assembler offers a unit price to each individual component supplier and pays only the components actually sold, and the component suppliers decide on the production quantity of their components for the system. |
Date: | 5 September 2013 |
Time: | 11:00am - 1:00pm |
Speaker: |
Professor Rick So The Paul Merage School of Business, University of California, Irvine |
Venue: | Room B2625, Academic 1, Blue Zone, City University of Hong Kong |
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