Demand switching criteria for multiple products: An inventory cost analysis

Author: Ying-Jiun HsiehStudent: Hong Kong, Chen

journal homepage: www.elsevier.com/locate/omega

Abstract

• The problem of demand switching • How a firm can take advantage of the

risk-pooling effect to gain more profit.

• The profit increases as a result of higher profit margin or smaller demand variation and correlation.

Abstract

• There are no relation between profit and switching rate

1.Introduction and literature review

• Uncertainty of products’ demand is a common source of variability which often calls for additional attention in the decision making process regarding inventory( 庫存 ) and distribution systems

Introduction and literature review

• when multiple products are considered• However…. None of the previous studies addressed the

specific problem we consider even though the risk-pooling effect was well documented in an abundant body of research

1.Introduction and literature review

• Our questions of interest are not fully answered by existing literature….

1.Introduction and literature review

• Our proposed demand switching models are then developed and analyzed

• The heuristic approach is proposed to find the optimal switching paths and calculate the corresponding switching rates

• We also discuss the assignment of switched demand in the case of limited switched demand

2.Basic definitions and assumptions

2.Basic definitions and assumptions

3.The profit functions and assignment of the switched demand

• In this section, the profit function for FDS is developed. We also examine the assignment of the switched demand in each criterion.

3.1. Properties of demand switching

3.1. Properties of demand switching

3.1. Properties of demand switching

3.2. Assignment of limited switched demand

• how would one determine the optimal assignment (最適分配 )of the switched demand for a specific switching criterion(尺度 )?

3.2. Assignment of limited switched demand

• In the numerical examples none of them can always guarantee to yield( 產生 ) a higher profit than the other two.

• The relative relationship depends on a number of parameters such as demand variation and correlation, etc.

4. Numerical examples

5. Conclusion