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Hongyan Li, Joern Meissner
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| Abstract |
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Lot-sizing and capacity planning are important supply chain decisions, and com-
petition and cooperation affect the performance of these decisions. In this paper,
we look into the dynamic lot sizing and resource competition problem of an in-
dustry consisting of multiple firms. A capacity competition model combining the
complexity of time-varying demand with cost functions and economies os scale
arising from dynamic lot-sizing costs is developed. Each firm can replenish inven-
tory at the beginning of each period in a finite planning horizon. Fixed as well as
variable production costs incur for each production setup, along with inventory
carrying costs. The individual production lots of each firm are limited by a con-
stant capacity restriction, which is purchased up front for the planning horizon.
The capacity can be purchased from a spot market, and the capacity acquisition
cost fluctuates with the total capacity demand of all the competing firms. We solve
the competition model and establish the existence of a capacity equilibrium over
the firms and the associated optimal dynamic lot-sizing plan for each firm under
mild conditions. |
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| Keywords |
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Game theory, Capacity optimization, Competition, Lot sizing, Equilibrium
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| Status |
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Working Paper |
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| Download |
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Coming soon.www.meiss.com/download/SC-Li-Meissner-02.pdf
(172 kb) |
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| Reference |
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BibTeX,
Plain Text |
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