An EOQ model with multiple suppliers and random capacity

We consider an EOQ model with multiple suppliers that have random capacities, which leads to uncertain yield in orders. A given order is fully received from a supplier if the order quantity is less than the supplier's capacity; otherwise, the quantity received is equal to the available capacity...

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Bibliographic Details
Published in:Naval research logistics 2006-02, Vol.53 (1), p.101-114
Main Authors: Erdem, Asli Sencer, Fadilog̃lu, Mehmet Murat, Özekici, Süleyman
Format: Article
Language:English
Subjects:
EOQ
multiple suppliers
order diversification
random capacity
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Summary:We consider an EOQ model with multiple suppliers that have random capacities, which leads to uncertain yield in orders. A given order is fully received from a supplier if the order quantity is less than the supplier's capacity; otherwise, the quantity received is equal to the available capacity. The optimal order quantities for the suppliers can be obtained as the unique solution of an implicit set of equations in which the expected unsatisfied order is the same for each supplier. Further characterizations and properties are obtained for the uniform and exponential capacity cases with discussions on the issues related to diversification among suppliers. © 2005 Wiley Periodicals, Inc. Naval Research Logistics, 2006
ISSN:0894-069X
1520-6750
DOI:10.1002/nav.20125