Impact of finite life cycle to a consignment stocking supply chain with uncertain demand




Yi, Hui Zhi
Sarker, Bhaba R.
Li, Cun Rong

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DEStech Publications, Inc.


There are usually two reasons that force a supply chain to adopt the consignment stocking policy: the high demand variance and the high risk of obsolescence. This research aims to study the influences of these two issues to a consignment stocking integrated supply chain. To better reflect the real situation in the engineering practice, the buyer's warehouse limitation and a reducible lead time is also considered. A five-variable mixed-integer optimization model that aimed to minimize the annual joint total expected cost (JTEC) is developed under the general assumption that the production rate, the number of shipments and the shipping quantities are all fixed. To distinguish the Consignment Stocking policy from traditional ones, the holding cost is considered to consist of a storage component and a financial component. Due to the complexity of the objective function, traditional mathematical methods are cumbersome. As a result, closed-form solutions for the model are not provided. Instead, a novel doubly-hybrid meta-heuristic algorithm is employed to solve the problem. A numerical example is used to illustrate the solution procedure and the efficiency of the doubly-hybrid meta-heuristic algorithm.


Paper presented at the Proceedings of the 24th International Conference on Flexible Automation & Intelligent Manufacturing, held May 20-23, 2014 in San Antonio, Texas, and organized by the Center for Advanced Manufacturing and Lean Systems, University of Texas at San Antonio
Includes bibliographical references


Product life cycle, Production planning, Inventory control