RUTGERS - THE STATE UNIVERSITY OF NEW JERSEY
Rutgers Business School – Newark and New Brunswick
Department of MSIS
22:711:575
Stochastic Models in Supply Chain Management
Spring 2010
Professor Michael N. Katehakis
1074 1 Washington Park
Phone: 973-353-5295
Fax: 973-353-5003
Email: mnk@andromeda.rutgers.edu
Lectures
Mondays 5:30-8:20 PM
1 Washington Park, # 535.
Office Hours
By appointment, typically at 1 Washington Park, # 1074, on Mondays 3:30–4:30 PM.
Course Outline
This course covers economic models in supply chain management under uncertainty. The
emphasis is on the foundations of dynamic optimization tools in stochastic inventory models.
We study key concepts such as Preservation and Attainment, Myopic Policies, optimality of
(s,S) policies, capacitated inventory management, Bayesian Inventory Models, and Contracts
in Supply Chains.
Topics:
1. The EOQ and the Newsvendor Inventory Models.
2. Recursion and Finite Horizon Optimization Models.
3. Dynamic Inventory Management - economic lot-sizing models.
4. Myopic Policies.
5. Optimality of (s,S) policies.
6. Monotone Optimal Inventory Control Policies.
7. Capacity Procurements under Unknown Demand.
8. Empirical Bayesian Inventory Models.
9. Continuous Time Models.
10. Competitive and Cooperative Inventory Policies.
11. Manufacturer’s Return Policies and Retail Competition.
12. Supply Contracts with Quantity Commitment and Stochastic Demand.
13. Option Contracts in Supply Chains.
14. Vertical Restraints with Incomplete Information.
15. Modeling the Impact of Information on Inventories.
Suggested Readings:
TEXTS.
1. Evan L. Porteus(2002) Foundations of Stochastic Inventory Theory. Stanford
Univ Press.
2. P. H. Zipkin (2000) Foundations of Inventory Management, McGraw-Hill/Irwin
Papers.
1 Burnetas and Gilbert, «Future Capacity Procurements
under Unknown Demand and Increasing Costs”, Mgt Sci. 2001.
2. Lariviere and Porteus, «Stalking Information: Bayesian Inventory Management
with Unobserved Lost Sales», Mgt. Sci., 45 (1999), 346-363.
3. Burnetas and Ritchken «Option Contracts in Supply Chains» working paper.
4. Tsay, “The Quantity Flexibility Contract and Supplier-Customer Incentives”, Mgt.
Sci. 45, (1999), 1339-1358.
5. Cachon and Zipkin, “Competitive and Cooperative Inventory Policies in a TwoStage Supply Chain”, Mgt. Sci., 45 (1999), 936-953.
6. Van Mieghem and Dada “Price versus Production Postponement: Capacity and
Competition”, Mgt. Sci., 45 (1999), 1631-1649.
7. Gal-Or (1991), “Vertical Restraints with Incomplete Information”, Journal of
Industrial Economics, 39, 503-516.
8. Cachon-Lariviere, “Capacity Allocation with Past Sales: When to Turn and Earn”,
Mgt. Sci., 45, (1999), 685-703.
9. Van Mieghem and Dada “Price versus Production Postponement: Capacity and
Competition”, Mgt. Sci., 45 (1999), 1631-1649.
10. S.Tayur, R Ganeshan, M. J. Magazine (2000) . Quantitative Models for Supply
Chain Management, International Series in Operations Research & Management
Science, 17.