A serial supply chain of newsvendor problem with safety stocks under complete and partial information sharing

In-Jae Jeong, V. Jorge Leon

Research output: Contribution to journalArticle

16 Scopus citations

Abstract

We consider a supply chain where multiple members are serially connected. The decision is to determine the ordering quantity of a member to the next upstream member in the supply chain. The basic cost model is similar to the newsvendor problem with additional consideration to safety stock. This paper presents optimal approaches for coordination of the supply chain under both complete and partial information sharing in order to maximize the total expected benefit. For complete information sharing we develop an optimal coordination algorithm. For partial information sharing, we propose an optimal coordination algorithm based on the Alternating Direction Method and the Diagonal Quadratic Approximation Method. A numerical example is discussed to show the optimal convergence of ordering quantities and discuss the properties of the proposed algorithms.

Original languageEnglish
Pages (from-to)412-419
Number of pages8
JournalInternational Journal of Production Economics
Volume135
Issue number1
DOIs
StatePublished - 2012 Jan 1

Keywords

  • Augmented Lagrangian function
  • Newsvendor problem
  • Supply chain

Fingerprint Dive into the research topics of 'A serial supply chain of newsvendor problem with safety stocks under complete and partial information sharing'. Together they form a unique fingerprint.

  • Cite this