Supplier Replacement Model in a One-Level Assembly System under Lead-Time Uncertainty

Hasan Murat Afsar,Oussama Ben-Ammar,Faicel Hnaien,Alexandre Dolgui

doi:10.3390/app10103366

Abstract

Supplier selection/replacement strategies, purchasing price negotiation and optimized replenishment policies play a key role in efficient supply chain management in today’s dynamic market. Their importance increases even more in Industry 4.0. In this paper, we propose a joint model of replenishment planning and purchasing price negotiation in the context of supplier replacement in a one-level assembly system (OLAS) producing one type of finished product. The real component lead times are stochastic. There is consequently a non-negligible risk that the assembly process may be stopped if all components for assembly are not delivered on the due date. This incurs inventory-related costs, holding and backlogging, which should be minimized. We consider a set of suppliers characterized by their prices and the probability distributions of their lead-times, and we present a model and an approach that optimize not only replenishment policy, but also purchasing prices. For a given unit, it is possible to model several alternative suppliers with alternative pricing and lead-time uncertainties, and evaluate their impacts on the total cost: composed of holding, backlogging and purchasing costs for the assembly system. The findings of this study indicate that it can be beneficial to pay suppliers an additional purchase cost in order to reduce the holding and backlogging costs related to uncertainty. In consequence, decision makers can use the proposed approach to negotiate prices and delivery delays or to select suppliers.

Highlights

Much research has been done on efficient replenishment as a major factor in inventory control.inappropriate replenishment policies result in stock-outs or overstocks
The problem is to decide the planned lead time for each supplier and component, minimizing the total cost, which is composed of holding cost for components and backlogging cost for the finished product
The results show that the joint pricing and replenishment optimization can increase system efficiency, and the approach and model can be used for replenishment planning and Material Requirement Planning (MRP) parameterization and for supplier selection and purchasing price negotiation

Summary

Introduction

Much research has been done on efficient replenishment as a major factor in inventory control.inappropriate replenishment policies result in stock-outs or overstocks. At the same time, overstocking drastically increases inventory costs. The optimization of replenishment often leads to the search for a trade-off between the backlogging and holding to minimize the total cost. Replenishment planning models are used at the operational level when the suppliers are already selected and decision makers know the lead time distributions for each of them. These distributions are obtained from statistics of past deliveries. The problem is to decide the planned lead time for each supplier and component, minimizing the total cost, which is composed of holding cost for components and backlogging cost for the finished product

Results

Discussion

Conclusion