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MULTI‐VENDOR SOURCING IN A RETAIL SUPPLY CHAIN*
Author(s) -
AGRAWAL NARENDRA,
SMITH STEPHEN A.,
TSAY ANDY A.
Publication year - 2002
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2002.tb00489.x
Subject(s) - vendor , supply chain , flexibility (engineering) , business , profit (economics) , production (economics) , industrial organization , product (mathematics) , supply chain management , inventory cost , lead time , operations management , computer science , marketing , microeconomics , economics , geometry , mathematics , management
This paper describes a methodology for managing capacity, inventory, and shipments for an assortment of retail products produced by multiple vendors. The vendors differ in lead times, costs, and production flexibility. Product demand is uncertain and fluctuates over time. We develop an optimization model to choose the production commitments that maximize the retailers expected gross profit, given demand forecasts and vendors capacity and flexibility constraints. The model has been incorporated into a decision support system, developed in collaboration with supply chain planners at a global retailer of seasonal and fashion merchandise. The software has been tested by two major retailers.