Demand switching criteria for multiple
products: An inventory cost analysis
journal homepage: www.elsevier.com/locate/omega
Author: Ying-Jiun Hsieh
Student: Hong Kong, Chen
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