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Optimal Procurement Policy For Cost Conscious Retailer


Marketed By :  LAP LAMBERT Academic Publishing   Sold By :  Kamal Books International  
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  • Product Description

Manufacturers whose products primarily relay on expensive raw materials need to make well informed procurement decisions in order to reduce their production costs. Decision making is especially difficult when there is uncertainty about the raw material cost as well as the product demand. This research considers an optimum procurement and production planning problem under uncertainty. Basic raw material is a rare metal with a dynamically and stochastically changing price. The manufacturer has the dual sourcing option: buy from the spot market; or to sign long term contracts. Long term contracts can be signed only at the beginning of every year with a yearly duration. In addition, the contract price depends on the average spot price during some interval. We first consider a simplified version of the problem without long-term contract, and assume a base-stock procurement and inventory control policy. We model the problem as a Markov chain and present some numerical examples demonstrating the effect of various parameters on the optimum base-stock value. Then, we investigate a case with dual procurement option, and present our results.

Product Specifications
SKU :COC67923
AuthorSicong Hou and Melike Baykal-Gürsoy
Number of Pages76
Publishing Year2013-11-20T00:00:00.000
Edition1 st
Book TypeMathematics
Country of ManufactureIndia
Product BrandLAP LAMBERT Academic Publishing
Product Packaging InfoBox
In The Box1 Piece
Product First Available On ClickOnCare.com2015-07-08 00:00:00