Setting Operating Policies for Supply Hubs

21 Pages Posted: 13 Oct 2012

See all articles by Janat Shah

Janat Shah

Indian Institute of Management Udaipur

Mark Goh

National University of Singapore (NUS) - NUS Business School

Date Written: March 30, 2002

Abstract

This paper deals with the joint optimisation of operations at the supply hub for the hub vendor and the upstream supplier. Different operating conditions are considered, namely, backordering, minimum and maximum specified inventory levels. Some analytical insights on better managing suppliers operating under a vendor managed inventory program are presented. Essentially, we show that the penalty cost imposed on over-and under stocking, and the min-max policy for hub inventory reside in the power of the hub operator while the order cost of dispatching and production reside with the supplier. A numerical example and an algorithm are included to highlight this result.

Keywords: Supply Chain Management, Supply hub, Logistics

Suggested Citation

Shah, Janat and Goh, Mark, Setting Operating Policies for Supply Hubs (March 30, 2002). IIM Bangalore Research Paper No. 185, Available at SSRN: https://ssrn.com/abstract=2157430 or http://dx.doi.org/10.2139/ssrn.2157430

Janat Shah (Contact Author)

Indian Institute of Management Udaipur ( email )

Mohanlal Sukhadia University Campus
Udaipur, Rajasthan 313001
India

HOME PAGE: http://www.iimu.ac.in

Mark Goh

National University of Singapore (NUS) - NUS Business School ( email )

1 Business Link
Singapore, 117592
Singapore

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