Optimal and heuristic solutions for a scheduling problem arising in a foundry
Computers and Operations Research
Gradient-based simulation optimization
Proceedings of the 38th conference on Winter simulation
A Generalization of the Inventory Pooling Effect to Nonnormal Dependent Demand
Manufacturing & Service Operations Management
Sourcing with random yields and stochastic demand: A newsvendor approach
Computers and Operations Research
Impact of Partial Manufacturing Flexibility on Production Variability
Manufacturing & Service Operations Management
Multimarket Facility Network Design with Offshoring Applications
Manufacturing & Service Operations Management
Dynamic Capacity Management with Substitution
Operations Research
Optimal Supply Diversification Under General Supply Risks
Operations Research
Robust models for manufacturing capacity planning underdemand uncertainty
CASE'09 Proceedings of the fifth annual IEEE international conference on Automation science and engineering
Global Facility Network Design with Transshipment and Responsive Pricing
Manufacturing & Service Operations Management
Operational Flexibility and Financial Hedging: Complements or Substitutes?
Management Science
Computers & Mathematics with Applications
Integrating Long-Term and Short-Term Contracting in Beef Supply Chains
Management Science
Process Flexibility Revisited: The Graph Expander and Its Applications
Operations Research
The impact of uncertain yield on capacity acquisition in process plant networks
Mathematical and Computer Modelling: An International Journal
A general framework for cooperation under uncertainty
Operations Research Letters
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We introduce a class of models, callednewsvendor networks, that allow for multiple products and multiple processing and storage points and investigate how their single-period properties extend to dynamic settings. Such models provide a parsimonious framework to study various problems of stochastic capacity investment and inventory management, including assembly, commonality, distribution, flexibility, substitution and transshipment. Newsvendor networks are stochastic models with recourse that are characterized by linear revenue and cost structures and a linear input-output transformation. While capacity and inventory decisions are locked in before uncertainty is resolved, some managerial discretion remains via ex-post input-output activity decisions. Ex-post decisions involve both the choice of activities and their levels and can result in subtle benefits. This discretion in choice is captured through alternate or "nonbasic" activities that can redeploy inputs and resources to best respond to resolved uncertain events. Nonbasic activities are never used in a deterministic environment; their value stems from discretionary flexibility to meet stochastic demand deviations from the operating point.The optimal capacity and inventory decisions balance overages with underages. Continuing the classic newsvendor analogy, the optimal balancing conditions can be interpreted as specifying multiple "critical fractiles" of the multivariate demand distribution; they also suggest appropriate measures for and trade-offs between product service levels. This paper shows that the properties of optimal newsvendor network solutions extend to a dynamic setting under plausible conditions. Indeed, we establish dynamic optimality of inventory and capacity policies for the lost sales case. Depending on the nonbasic activities, this also extends to the backordering case. Analytic- and simulation-based solution techniques and graphical interpretations are presented and illustrated by a comprehensive example that features discretionary input commonality and a flexible processing resource.