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This paper explores ways of conceptualizing and studying the power of coordination and strategic alliances within a manufacturing and distribution supply chain consisting of one manufacturer and one distributor. The supply chain operates to meet price-sensitive random demand of a product with a short product life cycle. We derive closed-form multi-attribute measures of performance for the supply chain in the presence of and in the absence of coordination of pricing and production/ordering decisions. The optimal coordinated pricing and production/ordering policies, as well as each party's optimal policies in the absence of coordination, are developed. Our results yield insights into basic managerial issues for this type of manufacturing and distribution supply chains. [ABSTRACT FROM AUTHOR]

In this paper, we study coordination mechanisms through penalty schemes between manufacturing and marketing departments which enable organizations to match demand forecasts with production quantities. This research was motivated by our interactions with a leading electronics and computer manufacturer. We consider two possible organizational structures -- centralized and decentralized. In the decentralized case we model a single period problem where demand is uncertain and the marketing department provides a forecast to manufacturing which in turn produces a quantity based on the forecast and the demand distribution. In the centralized case, marketing and manufacturing jointly decide on the production quantity. Among other results we show that by setting suitable penalties one can generate the same result in a decentralized system as that obtained from a centralized system. We also show that setting the correct penalty for marketing is essential for coordination. Subsequently, we analyze models where the marketing department has the ability to change the distribution of demand based on efforts (through promotion, advertising and personal relationship with customers). An interesting result indicates that it is possible to set penalties so that a coordinated decentralized system outperforms a centralized system when there are no tangible costs to the firm for the efforts expended by the marketing department. [ABSTRACT FROM AUTHOR]

In this paper we describe an application of designing products and processes for supply chain management at a large electronics products manufacturer. The objective of our research project was to reduce the costs of complexity resulting from a proliferation of parts and processes in the manufacturer's supply chain. In order to perform this analysis, we developed the Supply Chain Modeling and Analysis Tool (SCMAT). SCMAT models decentralized supply chains and is less data-intensive and yet more general than previous work in this area. [ABSTRACT FROM AUTHOR]

This paper considers a single-product dual-supply problem under a periodically reviewed, finite planning horizon. The downstream party, the manufacturer, is supplied by two upstream parties, local and global suppliers, with consecutive leadtimes. Both suppliers place per period minimum and maximum capacity limits on the manufacturer's orders. It is shown that a two-level modified base stock policy is optimal without any restrictions on the ordering costs. Using various analytical results, it is illustrated how the optimal policy parameters change as a function of the problem parameters. To prove the analytical results, a new functional property—bounded increasing [decreasing] differences—which is a subset of the increasing [decreasing] differences property commonly used in the literature is introduced. Numerical analyses are used to explain the trade-offs between complementary services in terms of prices, leadtimes and order capacity limits. For example, it is shown that the manufacturer follows different strategies for different product types: for inventory-cost-driven products, she relies on the local supplier to keep her supply chain responsive. Furthermore, the manufacturer procures from the local supplier as part of a balanced supply portfolio, i.e., orders from the local supplier are not limited to emergency situations. This role of the local supplier diminishes, however, as the leadtime increases. It is also found that increases in minimum capacity limits are generally more favorable to the local supplier. [Supplementary materials are available for this article. Go to the publisher's online edition of IIE Transactions for the following free supplemental resources: Appendix with additional proofs and further details of numerical analysis.] [ABSTRACT FROM AUTHOR]

The increasing market demand for product variety forces manufacturers to design mixed-model assembly lines on which different product models can be switched back and forth and mixed together with little changeover costs. This paper describes the design and implementation of an optimization-based scheduling algorithm for mixed-model compressor assembly lines at Toshiba with complicated component supply requirements. A separable integer optimization formulation is obtained by treating compressor lots going through a properly balanced line as undergoing a single operation, and the scheduling goal is to delivery products just in time while avoiding possible component shortage. The problem is solved by using Lagrangian Relaxation (LR). Several generic defects of LR leading to slow algorithm convergence are identified based on geometrical insights, and are overcome by perturbing/ changing problem parameters. Numerical testing shows that near-optimal schedules are efficiently obtained, convergence is significantly improved, and the method is effective for practical problems. The system is currently under deployment at Toshiba. [ABSTRACT FROM AUTHOR]

One of the dilemmas that manufacturers face involves the trade off between the cost of maintaining a variety of production processes, and the cost of not having the ideal process for every product that they produce. This issue is continuing to become more of a problem as manufacturers are forced by market conditions to offer a wider selection of products. We study an instance of this problem in the manufacture of sheet metal parts. We model the problem of selecting and/or designing tools to punch holes in these parts. The cost of not having an "ideal process" is the cost of not having a tool that precisely matches a hole's design diameter. We consider both general "process deviation" costs as well as the Taguchi loss function. Solution procedures are provided for several versions of the problem. [ABSTRACT FROM AUTHOR]