Joint Optimization in Supply Chain

Abstract

With increased globalization and competition in the current market, supply chain has become longer and more complicated than ever before. An effective and efficient supply chain is crucial and essential to a successful firm. In a supply chain, inventories are a very important component as the investment in inventories is enormous. Inventory management is always coupled with other functions, for example purchasing, production and marketing. In this dissertation, we study inventory management for both single-stage and multi-echelon systems. Two main streams of research work are summarized. The first is the joint optimization of pricing and inventory control for continuous/periodic review single-stage inventory/production systems. We characterize the optimal policies and further develop efficient computational algorithms to find the optimal control parameters. We also provide insights on the pricing and inventory relationship. The second is the analysis of multi-echelon inventory systems, in which we derive the optimal inventory control policies for several different systems that have not yet been studied in the current literature. Moreover, simple bounds and heuristics for the optimal policies are developed for the serial systems with and without expedited shipping so that the implementability of the optimal policies is improved.