The structure of the optimal combined sourcing policy using capacity reservation and spot market with price uncertainty

  • Karl Inderfurth
  • Peter Kelle
Schlagworte: Capacity reservation, spot market, purchasing policy, supply contracts, stochastic inventory control

Abstract

This contribution focuses on the cost-effective management of the combined use of two procurement options: the short-term option is given by a spot-market with random price, whereas the long-term alternative is characterized by a multi period capacity reservation contract with fixed purchase price, reservation level and capacity reservation cost. Considering a multiperiod problem with stochastic demand, the structure of the optimal combined purchasing policy is derived using stochastic dynamic programming.

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2018-09-05
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