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Supply system design under uncertainty constraint by using Markov modulated poisson process modeling
Journal article   Peer reviewed

Supply system design under uncertainty constraint by using Markov modulated poisson process modeling

Fong-Fan Wang and Chao-Ton Su
Journal of the Chinese Institute of Industrial Engineers, Vol.23(1), pp.20-33
2006

Abstract

Markov modulated Poisson process Quasi-birth-and-death Supply system
This study used Markov modulated Poisson process (MMPP) to model supply systems under various uncertainty constraints. First the uncertainty factors embedded in a supply system were assumed to be unreliable server with or without unreliable repairman. The market demand may be non-stationary random process. Steady state performance measures under different uncertainty scenarios were investigated by using an algorithmic procedure to solve the underlying quasi-birth-and-death (QBD) process. The optimal resource design of the supply systems under various uncertainty constraints was then solved as the trade-off among costs of inventory holding, customer waiting, server repair and normal operation. Numerical studies of the proposed models investigated the impact of uncertainties on the performance of a multi-echelon supply system under a make-to-order (MTO) supply policy. The results are satisfactory and provide managerial insights on strategic supply decision.

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