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  4. Planning Supply with 'Opportunity Goods' : Complementing Premium Parts with Select Discount Components
 
conference paper

Planning Supply with 'Opportunity Goods' : Complementing Premium Parts with Select Discount Components

Weber, Thomas A.  
2020
ICCMB 2020: Proceedings of the 2020 the 3rd International Conference on Computers in Management and Business
3rd International Conference on Computers in Management and Business

In this paper, we introduce the notion of an "opportunity good" as a discount production input that may prove of satisfactory quality upon inspection and otherwise can be returned to the supplier. While in a quality-sensitive setting it is never optimal to source only opportunity goods without ever running out of stock, it is often best to complement high-quality premium inputs by a significant fraction of goods that are of low but sufficiently high-variance quality, provided they can be returned at a reasonable fee. Such dual sourcing of components is currently being used in certain industries to produce sensitive equipment. In an EOQ framework, we examine the optimal production input split between opportunity goods and high-quality inputs.

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Type
conference paper
DOI
10.1145/3383845.3383897
Author(s)
Weber, Thomas A.  
Date Issued

2020

Published in
ICCMB 2020: Proceedings of the 2020 the 3rd International Conference on Computers in Management and Business
ISBN of the book

978-1-4503-7677-8

Total of pages

5

Start page

243

End page

247

Editorial or Peer reviewed

REVIEWED

Written at

EPFL

EPFL units
OES  
Event nameEvent placeEvent date
3rd International Conference on Computers in Management and Business

Tokyo, Japan

January, 2020

Available on Infoscience
June 18, 2020
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/169437
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