Abstract

Outsourcing materials and components in manufacturing systems has become a turning point in modern supply chain management to facilitate high performance and business growth in an interconnected world. This trend has made supplier selection and order lot-sizing critical for businesses, leading to studies focused on optimizing these decisions driven by the need to improve efficiency. In this research, we study a supplier selection and order allocation problem in a decentralized three-stage supply chain with price sensitive demand for products. A mixed integer nonlinear programming model is proposed with the objective of maximizing the overall supply chain profit while applying a profit-sharing policy that ensures a fair distribution of profit among all participating partners. To help overcome a possible negative impact due to profit-sharing, we have developed a price-shifting mechanism to adjust the price of materials produced by suppliers to guarantee the selection of the most efficient vendors. Computational results show that the price-shifting process has a positive influence on the supply chain performance as profit increases.

Biographical Sketch

Dr. Jose Ventura is a Distinguished Professor of Industrial and Manufacturing Engineering at Penn State and Director of the Service Engineering and Applied Optimization (SEAOPT) Lab. He holds a BS degree in industrial engineering from the Polytechnic Univ. of Catalonia (Spain), and MEng and PhD degrees in industrial engineering and operations research from Univ. of Florida. His research interest focuses on supply chain management, with a varying emphasis that includes supplier selection, auctions and price negotiation strategies for procurement, inventory coordination, and transportation. He is also interested in traffic network equilibrium, energy transport logistics, and energy policy. Ventura has published over 130 peer-reviewed archival journal papers. His research has garnered funding from federal and state agencies, such as NSF, DARPA-TRP, the Pentagon, and the PA Turnpike Commission, and industry, such as GE and McDonnell Douglas.  His research has been recognized by numerous awards, including the 2017 IISE David F. Baker Distinguished Research Award, the 1990 NSF Presidential Young Investigator Award, and the 1988 IISE Doctoral Dissertation Award.