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In this paper, we address the optimal joint control of inventory and transshipment for a firm that produces in two locations and faces capacity uncertainty. Capacity uncertainty (e.g., due to downtime, quality problems, yield, etc.) is a common feature of many production systems but its effects have not been explored in the context of a firm that has(More)
For a single product, single-stage capacitated production-inventory model with stochas-tic, periodic (cyclic) demand, we nd the optimal policy and characterize some of its properties. We study the nite-horizon, the discounted innnite-horizon and the innnite-horizon average cases. A simulation based optimization method is provided to compute the optimal(More)
This paper demonstrates optimal policies for capacitated serial multiechelon production/inventory systems. Extending the Clark and Scarf (1960) model to include installations with production capacity limits, we demonstrate that a modified echelon base-stock policy is optimal in a two-stage system when there is a smaller capacity at the downstream facility.(More)
This paper models a type of vendor-managed inventory (VMI) agreement that occurs in practice called a (z, Z) contract. We investigate the savings due to better coordination of production and delivery facilitated by such an agreement. The optimal behavior of both the supplier and the retailer are characterized. The optimal replenishment and production(More)
We consider a two-stage serial supply chain with capacity limits, where each installation is operated by managers attempting to minimize their own costs. A multiple-period model is necessitated by the multiple stages, capacity limits, stochastic demand, and the explicit consideration of inventories. With appropriate salvage value functions, a Markov(More)