This research introduces a general approach for integrating a probabilistic model of the changes in the committed orders with an analytical model of production and inventory planning under multi-period Quantity Flexibility contracts. We study a decentralized structure where a capacitated manufacturer, capable of subcontracting, serves multiple contract buyers who actually perform forecasts on a rolling horizon basis. We model the evolution of buyers' / commitments as a multiplicative forecast evolution process accommodating contract revision limits. A finite Markovian approximation to this sophisticated evolution model is introduced for facilitating the associated complex probability modeling. We implement computational dynamic programming and introduce an effective approach for reducing state-space dimensionality building upon our forecast evolution structure. Computational investigation demonstrates how the manufacturer benefits from the existence of order commitments and subcontracting option by analyzing the interplay of decisions.
| Identifer | oai:union.ndltd.org:METU/oai:etd.lib.metu.edu.tr:http://etd.lib.metu.edu.tr/upload/12609902/index.pdf |
| Date | 01 September 2008 |
| Creators | Kayhan, Mehmet |
| Contributors | Kayaligil, Sinan |
| Publisher | METU |
| Source Sets | Middle East Technical Univ. |
| Language | English |
| Detected Language | English |
| Type | Ph.D. Thesis |
| Format | text/pdf |
| Rights | To liberate the content for public access |
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