Modeling of Capacity Reservation and Supplier Selection Based on Option Contract
Publish place: International Journal of Industrial Engineering & Production Research، Vol: 22، Issue: 2
Publish Year: 1390
نوع سند: مقاله ژورنالی
زبان: English
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شناسه ملی سند علمی:
JR_IJIEPR-22-2_008
تاریخ نمایه سازی: 7 شهریور 1393
Abstract:
A key issue for manufacturing firms is planning for outsourced components. In this research, we have considered a manufacturer in a Make-to-Order production environment who has to outsource a special component from a set of suppliers. One selling season is considered and the manufacturer faces uncertain demand during the selling season. A good strategy for the manufacturer to balance both holding and lost sale costs is to initiate capacity reservation contracts with his suppliers. Thus, unlike the previous researches we have presented a mathematical model based on option mechanism that willhelp the manufacturer to select appropriate suppliers and order allocation, simultaneously. The considered option mechanism has a two part contract fee structure (option price and exercise price) and it is at the foundation of practical contracts used by different industries. A numerical example is used to illustrate the model and to investigate how option mechanism improves manufacturer's expected profit in comparison with the situation without applying the option mechanism.
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Authors
Iman Nosoohi
Department of industrial engineering, Isfahan University of Technology (IUT),
Naser Mollaverdi
Department of industrial engineering, Isfahan University of Technology (IUT),