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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 competition
and cooperation affect the performance of these decisions. In this paper,
we look into the dynamic lot sizing and resource competition problem of an industry
consisting of multiple firms. A capacity competition model combining the
complexity of time-varying demand with cost functions and economies of scale
arising from dynamic lot-sizing costs is developed. Each firm can replenish inventory
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 constant
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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International Journal of Production Economics Vol 131, Issue 2 (June 2011), pp 535–544. |
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| Download |
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www.meiss.com/download/SC-Li-Meissner-02.pdf
(182 kb) |
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| Reference |
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BibTeX,
Plain Text |
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