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Hongyan Li, Joern Meissner
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| Abstract |
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We develop a competitive supply chain model which combines the complexity of timevarying demand and cost
functions and that of scale economies arising from dynamic lotsizing costs. Each firm can replenish inventory in each of the T periods
into which the planning horizon is partitioned. Fixed as well as variable procurement costs are incurred for each procurement order,
along with inventory carrying costs. The individual orders are limited by a capacity restriction. The underlying capacity must be
purchased up front. Each firm determines, at the beginning of the planning horizon, the capacity to be purchased and the optimal
replenishing plan throughout the horizon. Based on the capacity demand for the competing firms, a market price is determined for the
capacity acquisition. This procedure is repeated every selling season. We establish the existence of an equilibrium and associated
optimal dynamic lot-sizing plans, under mild conditions. We also design efficient procedures to compute the equilibrium capacities
and dynamic lot-sizing plans. |
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| Keywords |
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Game theory, Capacity optimization, Supply chain management, Lot sizing, Heuristics
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| Status |
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Working Paper |
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| Download |
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www.meiss.com/download/SC-Li-Meissner.pdf
(234 kb) |
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