A coordination algorithm for deciding order-up-to level of a serial supply chain in an uncertain environment

Authors:
Kung-Jeng Wang;Wen-Hai Chih;Ken Hwang
Affiliations:
Department of Business Administration, National Dong Hwa University, Hualien, Taiwan, R.O.C.;Department of Business Administration, National Dong Hwa University, Hualien, Taiwan, R.O.C.;Graduate Institute of Technology and Innovation Management, National Chengchi University, Taipei, Taiwan, R.O.C.
Venue:
ICCSA'06 Proceedings of the 2006 international conference on Computational Science and Its Applications - Volume Part III
Year:
2006

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Abstract

This study proposed a method for coordinating the order-up-to level inventory decisions of isolated stations to cooperatively compensate loss in supply chain performance in a serial supply chain due to unreliable raw material supply. Doing so will improve the customer refill rate and lower the production cost within an uncertain environment in which the chain is highly decentralized, both material supply and customer demand are unreliable, and delay incurs in information flow and material flow. The proposed coordination method is then compared to single-station and multiple-station order-up-to policies. Simulated experiments reveal that our proposed method outperforms the others and performs robustly within a variety of demand and supply situations.