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Analysis of postponement strategy by EPQ-based models with planned backorders.
- Article from:
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Omega
- Article date:
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October 1, 2008
- Author:
- Li, Jian; Wang, Shouyang; Cheng, T.C. Edwin
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Copyright informationCOPYRIGHT 2008 Adams Business Media. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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This paper develops economic production quantity (EPQ)-based models with planned backorders to evaluate the impact of the postponement strategy on a manufacturer in a supply chain. We derive the optimal total average costs per unit time for producing and keeping n end-products in a postponement system and a non-postponement system, respectively. By comparing the optimal total average costs of the two systems, we evaluate the impact of postponement on the manufacturer under four circumstances. Our results show that postponement strategy can give a lower total average cost under certain circumstances. We also find that the key factors in postponement decisions are the variance of the ...