Middle East Technical University

Department of Industrial Engineering

Seminar

Friday, Oct.  23rd, 2009, 4:00 pm

IE Building, Blue Auditorium (Ground Floor)

Joint Replenishment Problem: A New Policy and Insights for the

Decentralized Case

Alper Şen

Bilkent University

In the first part of the talk, a new policy for the stochastic joint replenishment problem will be proposed. The policy is intended for settings in which order setup costs reflect the transportation costs and have a step-wise cost structure, each step corresponding to an additional transportation vehicle. Under this new policy, a replenishment order of constant size Q is triggered whenever the inventory position of one of the items (or the locations) drops to its reorder point s. The replenishment order is allocated to multiple items so that the inventory positions are equalized as much as possible. The policy is designed for conditions in which backorder and setup costs are high, as it allows the items to independently trigger replenishment orders and fully exploits the economies of scale by consistently ordering the same quantity. A numerical study shows that the new policy provides moderate benefits over the well-known (Q,s) policy under these conditions. The second part of the talk will relax the assumption that the items (or the locations) are centrally controlled and introduce two simple non-cooperative games that may be useful in allocating the jointly incurred costs to multiple parties for the deterministic case.

Alper Şen is an assistant professor of Industrial Engineering at Bilkent University. He obtained his Ph.D. degree in Business Administration from University of Southern California and B.S. & M.S. degrees in Industrial Engineering from Bilkent University. Prior to Bilkent, he worked as a consultant for a supply chain management software company in the US. His research interests are inventory management and revenue management.

Refreshments: 3:45 p.m

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