Fikri Karaesmen

Optimal Stock Allocation for a Capacitated Supply System

We consider a capacitated supply system that produces a single item that is demanded by several classes of customers. Each customer class may have a different backorder cost, so stock allocation arises as a key decision problem. We model the supply system as a multi customer make-to-stock queue. Using dynamic programming, we show that the optimal allocation policy has a simple and intuitive structure. In addition, we present an efficient algorithm to compute the parameters of this optimal allocation policy. Finally, for a typical supply chain design problem, we illustrate that ignoring the stock allocation dimension--a frequently encountered simplifying assumption--can lead to incorrect managerial decisions.

Integrating advance order information in make-to-stock production systems

Increased cooperation between supply chain partners and information technology are enabling the availability of advance order information for contract suppliers. Control mechanisms that take into account this availability are necessary in order to achieve the potential improvements in performance. We investigate the structure of optimal control policies for a discrete-time make-to-stock queue with advance order information, Since the optimal policy does not have a simple structure, we then propose a heuristic policy which is an extension of the base stock system that incorporates advance order information through a release lead time parameter. In order to quantify the benefits due to advance order information, we investigate the performance of the proposed mechanism and benchmark it against against the optimal control policy.

Call Center Outsourcing Contract Analysis and Choice

This paper considers a call center outsourcing contract analysis and choice problem faced by a contractor and a service provider. The service provider receives an uncertain call volume over multiple periods and is considering outsourcing all or part of these calls to a contractor. Each call brings in a fixed revenue to the service provider. Answering calls requires having service capacity; thus implicit in the outsourcing decision is a capacity decision. Insufficient capacity implies that calls cannot be answered, which in turn means there will be a revenue loss. Faced with a choice between a volume-based and a capacity-based contract offered by a contractor that has pricing power, the service provider determines optimal capacity levels. The optimal price and capacity of the contractor together with the optimal capacity of the service provider determine optimal profits of each party under the two contracts being considered. This paper characterizes optimal capacity levels and partially characterizes optimal pricing decisions under each contract. The impact of demand variability and the economic parameters on contract choice are explored through numerical examples. It is shown that no contract type is universally preferred and that operating environments as well as cost-revenue structures have an important effect.

Dynamic Scheduling in a Make-to-Stock System: A Partial Characterization of Optimal Policies

We consider the problem of dynamically allocating production capacity between two products to minimize the average inventory and backorder costs per unit time in a make-to-stock single machine system. Using sample path comparisons and dynamic programming, we give a characterization of the optimal hedging point policy for a certain region of the state space. The characterization is simple enough to lead to easily implementable heuristics and provides a formal justification of some of the earlier heuristics proposed.

The Value of Advance Demand Information in Production/Inventory Systems

Advance demand information, when used effectively, improves the performance of production/inventory systems. In this paper, we investigate the value of advance demand information in production/inventory systems. For a single-stage make-to-stock queue, we assess the value of using advance demand information under a variety of assumptions on the cost of obtaining advance demand information, and the delivery timing requirements. This analysis enables us to identify conditions under which advance demand information may bring significant benefits.

A performance comparison of pull type control mechanisms for multi-stage manufacturing

With the emergence of Just-in-Time manufacturing, production control mechanisms that react rapidly to actual occurrences of demand are gaining importance. Several pull type control mechanisms have been proposed to date, but it is usually di

Characterizing the performance of process flexibility structures

cult to quantify how good these mechanisms are, as well as understanding the structural properties that make them desirable. By using a two stage model and an optimal control framework, we study some of these issues here. Our framework permits quantifying the performance of classical mechanisms such as base stock and kanban and more complex mechanisms such as generalized and extended kanban. We also analyze the tradeo!s between single versus multiple control points and service level constraints on the backorders. ( 2000 Published by Elsevier Science B.V. All rights reserved.

Assessing the Benefits of Different Stock-Allocation Policies for a Make-to-Stock Production System

The objective is to identify preferred flexibility structures in service or manufacturing systems, when demand is random and capacity is finite. Considering a network flow type model as the basis of the analysis, general structural properties of flexibility design pertaining to the marginal values of flexibility and capacity are identified.

An integrated approach for the configuration of automated manufacturing systems

We consider a manufacturing facility that produces a single item that is demanded by several different classes of customers. The inventory-related cost performance of such a system can be improved by effective allocation of production and inventories. We obtain the optimal parameters for three easily implementable allocation policies. Our results cover the case of linear backorder costs as well as fill-rate constraints. We compare the optimal performance of these control policies to gain insights into the benefits of different production and stock-allocation rules.

On the interaction between retrials and sizing of call centers

Abstract The paper proposes a new integrated approach for supporting firms in their decisions of dimensioning automated production systems. The problem is closely related to the performance evaluation of the system since discriminating indicators are necessary to rank different alternatives. Traditionally, analytical methods and simulation have been used to evaluate the production system performance, with minor emphasis on the relationships between the tools and their use. Given the complexity of the problem, it is not possible to use only analytical methods that cannot enter deeply in problem details; at the same time the space of potential system configurations is too large to be evaluated by means of detailed tools such as simulation. In the proposed methodology, the problem is decomposed hierarchically into different sub-problems; each one has a different level of detail and a specific performance evaluation tool is used. At each level of the analysis, each system configuration is compared, by means of statistical tests, with the other alternatives with the purpose of discarding unprofitable solutions.