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Dual Sourcing Inventory Model with Uncertain Supply and Advance Capacity Information

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Book cover Operations Research Proceedings 2014

Part of the book series: Operations Research Proceedings ((ORP))

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Abstract

We model a periodic review, single stage dual sourcing inventory system with non-stationary stochastic demand, where replenishment can occur either through a regular stochastic capacitated supply channel with immediate delivery and/or an alternative uncapacitated supply channel with a longer fixed lead time. We focus on describing a situation in which upfront information on capacity availability of an unreliable supply channel is available, denoted as advance capacity information (ACI), to the customer. We derive the optimal dynamic programming formulation and we show some of the properties of the optimal policy by carrying out a numerical analysis. Additionally, our numerical results on the benefits of dual sourcing and the value of sharing ACI reveal several managerial insights.

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Authors and Affiliations

  1. Faculty of Economics, Department of Management and Organization, University of Ljubljana, Kardeljeva ploščad 17, Ljubljana, Slovenia

    Marko Jakšič

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  1. Marko Jakšič
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Correspondence to Marko Jakšič .

Editor information

Editors and Affiliations

  1. Operations Research, RWTH Aachen University, Aachen, Germany

    Marco Lübbecke

  2. Lehrstuhl II für Mathematik, RWTH Aachen University, Aachen, Germany

    Arie Koster

  3. RWTH Aachen University, Aachen, Nordrhein-Westfalen, Germany

    Peter Letmathe

  4. E.ON Energy Research Center, RWTH Aachen University, Aachen, Nordrhein-Westfalen, Germany

    Reinhard Madlener

  5. Management Science, RWTH Aachen University, Aachen, Nordrhein-Westfalen, Germany

    Britta Peis

  6. Chair of Operations Management, RWTH Aachen University, Aachen, Germany

    Grit Walther

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Jakšič, M. (2016). Dual Sourcing Inventory Model with Uncertain Supply and Advance Capacity Information. In: Lübbecke, M., Koster, A., Letmathe, P., Madlener, R., Peis, B., Walther, G. (eds) Operations Research Proceedings 2014. Operations Research Proceedings. Springer, Cham. https://doi.org/10.1007/978-3-319-28697-6_36

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