The impact of real-time information on supply chain strategies and operations

This dissertation investigates the effects of real-time information on supply chain operations and strategies as well as an inventory control problem with retail pre-packs in three essays. The first essay considers an order promising problem in the presence of pseudo order information in an Available-to-Promise (ATP) production-inventory system. We develop a Markov framework that captures lumpiness, non-stationarity and volatility, three key characteristics of pseudo order information. We characterize the structure of the optimal order acceptance policy for both capacity and inventory constrained cases by a sequence of thresholds. Our characterization has the features of a simple policy form and computational efficiency. We also characterize the effects of lead time and demand variability on the system performance and the policy parameters. We numerically compare the performance of three commonly used policies with that of the optimal policy. Our results show that ignoring pseudo order information and resource rationing can severely jeopardize the performance and profitability of the system. In the second essay, we study a joint dual sourcing/promotion problem with information updates in an inventory system where two suppliers have different lead times, purchase costs and capacity. We formulate a two stage stochastic programming with the first stage dealing with capacity reservation and the second stage dealing with sourcing and promotion decisions via a Markov Decision Process. We numerically characterize the structure of the optimal policy. We find that information updates, if appropriately utilized, can strengthen the effectiveness of other management levers, and improve the profitability of the system. In particular, information updates can reduce system inventory and promotion frequency, two major sources for bull-whip effect. Our results show that promoting optimally (based on both supply and demand information) can significantly outperform the strategies in which promotion is determined exogenously. Our study also highlights the importance of coordination between marketing and operations functions. In the third essay, we investigate a class of inventory control problem with retail pre-packs. We characterize the structure of the optimal policy for both single stock keeping unit (SKU) case and multiple SKU case. For single SKU case, the optimal policy is of a "band" form. We characterize the distribution of the steady state for the uniform demand case. We numerically investigate the impact of demand variability and demand correlation. Finally, we identify the situations under which simplified policies severely deteriorate system profitability by comparing their performances with that of the optimal policy.