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Order Quantity (order + quantity)
Kinds of Order Quantity Selected AbstractsA Mathematical Programming Approach for Procurement Using Activity Based CostingJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2000Zeger Degraeve Activity Based Costing and Management are important topics in today's management accounting literature. While there has been much attention paid in the Activity Based Costing literature to customer profitability analysis, process improvement and product design, there has been far less notice taken of purchasing. In this paper we develop an Activity Based Costing approach for the determination of procurement strategies. Vendor selection using an Activity Based Costing approach is choosing the combination of suppliers for a given product group that minimizes the total costs associated with the purchasing strategy. To this end we develop a mathematical programming model where decisions involve the selection of vendors and the determination of order quantities. The system computes the total cost of ownership, thereby increasing the objectivity in the selection process and giving the opportunity for various kinds of sensitivity analysis. [source] Contractual agreements for coordination and vendor-managed delivery under explicit transportation considerationsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2006egül Toptal Abstract We consider the coordination problem between a vendor and a buyer operating under generalized replenishment costs that include fixed costs as well as stepwise freight costs. We study the stochastic demand, single-period setting where the buyer must decide on the order quantity to satisfy random demand for a single item with a short product life cycle. The full order for the cycle is placed before the cycle begins and no additional orders are accepted by the vendor. Due to the nonrecurring nature of the problem, the vendor's replenishment quantity is determined by the buyer's order quantity. Consequently, by using an appropriate pricing schedule to influence the buyer's ordering behavior, there is an opportunity for the vendor to achieve substantial savings from transportation expenses, which are represented in the generalized replenishment cost function. For the problem of interest, we prove that the vendor's expected profit is not increasing in buyer's order quantity. Therefore, unlike the earlier work in the area, it is not necessarily profitable for the vendor to encourage larger order quantities. Using this nontraditional result, we demonstrate that the concept of economies of scale may or may not work by identifying the cases where the vendor can increase his/her profits either by increasing or decreasing the buyer's order quantity. We prove useful properties of the expected profit functions in the centralized and decentralized models of the problem, and we utilize these properties to develop alternative incentive schemes for win,win solutions. Our analysis allows us to quantify the value of coordination and, hence, to identify additional opportunities for the vendor to improve his/her profits by potentially turning a nonprofitable transaction into a profitable one through the use of an appropriate tariff schedule or a vendor-managed delivery contract. We demonstrate that financial gain associated with these opportunities is truly tangible under a vendor-managed delivery arrangement that potentially improves the centralized solution. Although we take the viewpoint of supply chain coordination and our goal is to provide insights about the effect of transportation considerations on the channel coordination objective and contractual agreements, the paper also contributes to the literature by analyzing and developing efficient approaches for solving the centralized problem with stepwise freight costs in the single-period setting. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006 [source] Flexible supply contracts for short life-cycle goods: The buyer's perspectiveNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 1 2002Joseph M. Milner In this paper we analyze a two-period supply contract which allows for order adjustment by the buyer. The buyer is required to place orders for two periods. After observing initial demand, the buyer is then allowed to adjust the second order, paying a per unit order adjustment penalty. We describe the optimal behavior of the buyer under such a contract, both in determining the initial order quantities and in subsequently adjusting the order. We compare the solution to a contract where no adjustment is allowed and to the case where adjustment is allowed without penalty. We demonstrate that flexible contracts can reduce the potentially negative effect of correlation of demand between two periods. Further, we investigate how the duration of the first period vis-à-vis the second period affects the profitability of the buyer as a function of the degree of correlation. © 2002 John Wiley & Sons, Inc. Naval Research Logistics, 49: 25,45, 2002; DOI 10.1002/nav.10002 [source] Channel Coordination for a Supply Chain with a Risk-Neutral Manufacturer and a Loss-Averse Retailer,DECISION SCIENCES, Issue 3 2007Charles X. Wang ABSTRACT This articles considers a decentralized supply chain in which a single manufacturer is selling a perishable product to a single retailer facing uncertain demand. It differs from traditional supply chain contract models in two ways. First, while traditional supply chain models are based on risk neutrality, this article takes the viewpoint of behavioral principal,agency theory and assumes the manufacturer is risk neutral and the retailer is loss averse. Second, while gain/loss (GL) sharing is common in practice, there is a lack of analysis of GL-sharing contracts in the supply chain contract literature. This article investigates the role of a GL-sharing provision for mitigating the loss-aversion effect, which drives down the retailer order quantity and total supply chain profit. We analyze contracts that include GL-sharing-and-buyback (GLB) credit provisions as well as the special cases of GL contracts and buyback contracts. Our analytical and numerical results lend insight into how a manufacturer can design a contract to improve total supply chain, manufacturer, and retailer performance. In particular, we show that there exists a special class of distribution-free GLB contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and retailer; in contrast with other contracts, the parameter values for contracts in this class do not depend on the probability distribution of market demand. This feature is meaningful in practice because (i) the probability distribution of demand faced by a retailer is typically unknown by the manufacturer and (ii) a manufacturer can offer the same contract to multiple noncompeting retailers that differ by demand distribution and still coordinate the supply chains. [source] Optimal manufacturer's pricing and lot-sizing policies under trade credit financingINTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH, Issue 6 2006Jinn-Tsair Teng Abstract In this paper, we extend Goyal's economic order quantity (EOQ) model to allow for the following four important facts: (1) the manufacturer's selling price per unit is necessarily higher than its unit cost, (2) the interest rate charged by a bank is not necessarily higher than the manufacturer's investment return rate, (3) the demand rate is a downward-sloping function of the price, and (4) an economic production quantity (EPQ) model is a generalized EOQ model. We then establish an appropriate EPQ model accordingly, in which the manufacturer receives the supplier trade credit and provides the customer trade credit simultaneously. As a result, the proposed model is in a general framework that includes numerous previous models as special cases. Furthermore, we provide an easy-to-use closed-form optimal solution to the problem for any given price. Finally, we develop an algorithm for the manufacturer to determine its optimal price and lot size simultaneously. [source] Direct shipping logistic planning for a hub-and-spoke network with given discrete intershipment timesINTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH, Issue 1 2006Libby Chong Abstract This paper proposes a heuristic procedure to solve the problem of scheduling and routing shipments in a hybrid hub-and-spoke network, when a given set of feasible discrete intershipment times is given. The heuristic procedure may be used to assist in the cooperative operational planning of a physical goods network between shippers and logistics service provider, or to assist shippers in making logistics outsourcing decisions. The objective is to minimise the transportation and inventory holding costs. It is shown through a set of problem instances that this heuristic procedure provides better solutions than existing economic order quantity-based approaches. Computational results are presented and discussed. [source] Simultaneous determination of inventories and accounts receivableMANAGERIAL AND DECISION ECONOMICS, Issue 4 2005Ayub Mehar The study presents a model based on 3375 observations from industrial firms in Pakistan, and the three-stage least square (3SLS) technique has been applied for the estimation. The results indicate that the economic order quantity (EOQ) of inventories is not a constant magnitude; it is a variable closely associated with ,time trend'. While the ,buffer stock' element can be estimated through the constant term of an equation. Receivables from customers show a negative correlation with liquid assets and the cost of production. Receivables are also shown to act as substitute for closing inventories. Copyright © 2005 John Wiley & Sons, Ltd. [source] Inventory policies for a make-to-order system with a perishable component and fixed ordering costNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 2 2009Katia C. Frank Abstract We consider a make-to-order production system where two major components, one nonperishable (referred to as part 1) and one perishable (part 2), are needed to fulfill a customer order. In each period, replenishment decisions for both parts need to be made jointly before demand is realized and a fixed ordering cost is incurred for the nonperishable part. We show that a simple (sn,S,S) policy is optimal. Under this policy, S along with the number of backorders at the beginning of a period if any and the availability of the nonperishable part (part 1) determines the optimal order quantity of the perishable part (part 2), while (sn,S) guide when and how much of part 1 to order at each state. Numerical study demonstrates that the benefits of using the joint replenishment policy can be substantial, especially when the unit costs are high and/or the profit margin is low. © 2009 Wiley Periodicals, Inc. Naval Research Logistics, 2009 [source] The stochastic joint replenishment problem: A new policy, analysis, and insightsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 6 2006Banu Yüksel Özkaya Abstract In this study, we propose a new parsimonious policy for the stochastic joint replenishment problem in a single-location, N -item setting. The replenishment decisions are based on both group reorder point-group order quantity and the time since the last decision epoch. We derive the expressions for the key operating characteristics of the inventory system for both unit and compound Poisson demands. In a comprehensive numerical study, we compare the performance of the proposed policy with that of existing ones over a standard test bed. Our numerical results indicate that the proposed policy dominates the existing ones in 100 of 139 instances with comparably significant savings for unit demands. With batch demands, the savings increase as the stochasticity of demand size gets larger. We also observe that it performs well in environments with low demand diversity across items. The inventory system herein also models a two-echelon setting with a single item, multiple retailers, and cross docking at the upper echelon. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006 [source] Contractual agreements for coordination and vendor-managed delivery under explicit transportation considerationsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2006egül Toptal Abstract We consider the coordination problem between a vendor and a buyer operating under generalized replenishment costs that include fixed costs as well as stepwise freight costs. We study the stochastic demand, single-period setting where the buyer must decide on the order quantity to satisfy random demand for a single item with a short product life cycle. The full order for the cycle is placed before the cycle begins and no additional orders are accepted by the vendor. Due to the nonrecurring nature of the problem, the vendor's replenishment quantity is determined by the buyer's order quantity. Consequently, by using an appropriate pricing schedule to influence the buyer's ordering behavior, there is an opportunity for the vendor to achieve substantial savings from transportation expenses, which are represented in the generalized replenishment cost function. For the problem of interest, we prove that the vendor's expected profit is not increasing in buyer's order quantity. Therefore, unlike the earlier work in the area, it is not necessarily profitable for the vendor to encourage larger order quantities. Using this nontraditional result, we demonstrate that the concept of economies of scale may or may not work by identifying the cases where the vendor can increase his/her profits either by increasing or decreasing the buyer's order quantity. We prove useful properties of the expected profit functions in the centralized and decentralized models of the problem, and we utilize these properties to develop alternative incentive schemes for win,win solutions. Our analysis allows us to quantify the value of coordination and, hence, to identify additional opportunities for the vendor to improve his/her profits by potentially turning a nonprofitable transaction into a profitable one through the use of an appropriate tariff schedule or a vendor-managed delivery contract. We demonstrate that financial gain associated with these opportunities is truly tangible under a vendor-managed delivery arrangement that potentially improves the centralized solution. Although we take the viewpoint of supply chain coordination and our goal is to provide insights about the effect of transportation considerations on the channel coordination objective and contractual agreements, the paper also contributes to the literature by analyzing and developing efficient approaches for solving the centralized problem with stepwise freight costs in the single-period setting. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006 [source] When to commit in a serial supply chain with forecast updatingNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 8 2003Mark E. Ferguson Abstract Negotiations between an end product manufacturer and a parts supplier often revolve around two main issues: the supplier's price and the length of time the manufacturer is contractually held to its order quantity, commonly termed the "commitment time frame." Because actual demand is unknown, the specification of the commitment time frame determines how the demand risk is shared among the members of the supply chain. Casual observation indicates that most manufacturers prefer to delay commitments as long as possible while suppliers prefer early commitments. In this paper, we investigate whether these goals are always in the firm's best interest. In particular, we find that the manufacturer may sometimes be better off with a contract that requires an early commitment to its order quantity, before the supplier commits resources and the supplier may sometimes be better off with a delayed commitment. We also find that the preferred commitment time frame depends upon which member of the supply chain has the power to set their exchange price. © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2003 [source] The economic lot size of the integrated vendor-buyer inventory system derived without derivativesOPTIMAL CONTROL APPLICATIONS AND METHODS, Issue 3 2002P.C. Yang Abstract In previous modellings of the integrated vendor,buyer system, the buyer's economic order quantity and the vendor's optimal number of deliveries are derived by setting the first derivatives to zero and solving the simultaneous equations. The Hessian matrix of second derivatives is used to prove the convexity of the objective function. This procedure can be difficult for students who lack the background of differential calculus. This study develops algebraically the optimal policy of the integrated vendor,buyer inventory system without using differential calculus. A significant cost reduction is also achieved when Goyal's model is modified. Copyright © 2002 John Wiley & Sons, Ltd. [source] OPTIMAL ORDERING IN A DUAL-SUPPLIER SYSTEM WITH DEMAND FORECAST UPDATESPRODUCTION AND OPERATIONS MANAGEMENT, Issue 1 2003HOUMIN YAN We study how an updated demand forecast affects a manufacturer's choice in ordering raw materials. With demand forecast updates, we develop a model where raw materials are ordered from two suppliers,one fast but expensive and the other cheap but slow,and further provide an explicit solution to the resulting dynamic optimization problem. Under some mild conditions, we demonstrate that the cost function is convex and twice-differentiable with respect to order quantity. With this model, we are able to evaluate the benefit of demand information updating which leads to the identification of directions for further improvement. We further demonstrate that the model applies to multiple-period problems provided that some demand regularity conditions are satisfied. Data collected from a manufacturer support the structure and conclusion of the model. Although the model is described in the context of in-bound logistics, it can be applied to production and out-bound logistics decisions as well. [source] | |||||||||||||